BUSN 70 Lecture Notes - Lecture 59: Decision Rule, Net Present Value

• School: Santa Clara University
• Department: Business
• Course: BUSN 70
• Professor: Strickland

Document Summary

Introduction to valuation: the time value of money, net present value, internal rate of. Start with basic equation and solve for t. You can use the financial keys on the calculator as well. You want to purchase a new car and you are willing to pay ,000. T = (fv / pv) / (1 + r) T = (20,000 / 15,000) / (1. 1) = 3. 02 years. We need to ask ourselves the following questions when evaluating decision criteria. You are looking at a new project and you have estimated the following cash flows: Your required return for assets of this risk is 12%. Where npv = 0 is when you meet the required added value/rate of return anything above is greater than the expected rate of return. In finance, the net present value (npv) is defined as the sum of the present values (pvs) of incoming and outgoing cash flows over a period of time.