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Net present value (NPV) is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows. NPV is used to evaluate and compare capital projects or financial products with cash flows spread over time, and it depends on the time value of money and the discount rate.
Learn the concept of time value of money, which is the idea that receiving money now is better than later. Find out how to calculate present and future values, annuities, and interest rates using formulas and examples.
Discounted cash flow (DCF) is a method to value a security, project, company, or asset based on the time value of money. Learn the main elements, history, mathematics, and applications of DCF analysis in finance and economics.
Learn how to estimate the current value of a company based on projected future cash flows adjusted for the time value of money. See the basic formula, a worked example, and modifications for different contexts and sectors.
Discounts and allowances are reductions to a basic price of goods or services.. They can occur anywhere in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer ...
Learn how to value a company's stock based on the sum of future cash flows from dividend payments, discounted back to their present value. Find the formula, derivation, properties, problems and related methods of the dividend discount model.
Discounting is a mechanism in finance that allows a debtor to delay payments to a creditor in exchange for a fee. The fee is based on the discount rate, which is the rate of return the creditor could earn on a similar investment. Learn how to calculate the present value and the discount factor of future cash flows.
Terminal value is the present value of future cash flows beyond a projection period, based on a constant growth rate or an exit multiple. Learn how to calculate terminal value using two methods and compare their advantages and disadvantages.