Example of NPV for a specific situation
Posted: Mon Jan 20, 2025 8:34 am
Let's say a person invested 200,000 rubles in a project. After 5 years, he got back the same 200,000 rubles. At first glance, it may seem that the investment paid off, since the entrepreneur got back his initial investment. But it is important to understand that after 5 years, these same 200,000 rubles may have significantly less purchasing power than today. This means that the actual profit could be lower than expected, and the investor went into the red.
These changes in the value of cash are taken into account by the NPV method, which allows you to determine the difference between the value of current cash flows and the initial indonesia mobile phone numbers database investment in the project. Thus, NPV is able to give an idea of the financial profitability of the event in a certain period of time.
Calculation of this indicator allows:
compare different projects and choose the best one in terms of benefits;
assess the financial return on potential investments;
make informed decisions regarding investment and budget allocation.
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"Marketer's KPI - Key Indicators and Accurate Calculation"
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Types of NPV
Forecasting is the most important part of business activity. Before starting to implement an investment project, it is important to make sure of its potential profitability. This is what the NPV method is used for. There are several Russian-language analogues of this term:
NPV. It stands for net present value. This is the most common and widely used concept. It is the one used in computer programs such as Excel.
NPV (net present value). When using the NPV method, cash flows are first discounted and then evaluated. Therefore, this name reflects the meaning of the calculation operation well.
NPV (Net Present Value). This concept is a breakdown of the calculation process. All income and expenses are ultimately compared to the value of money.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
These changes in the value of cash are taken into account by the NPV method, which allows you to determine the difference between the value of current cash flows and the initial indonesia mobile phone numbers database investment in the project. Thus, NPV is able to give an idea of the financial profitability of the event in a certain period of time.
Calculation of this indicator allows:
compare different projects and choose the best one in terms of benefits;
assess the financial return on potential investments;
make informed decisions regarding investment and budget allocation.
Read also!
"Marketer's KPI - Key Indicators and Accurate Calculation"
Read more
Types of NPV
Forecasting is the most important part of business activity. Before starting to implement an investment project, it is important to make sure of its potential profitability. This is what the NPV method is used for. There are several Russian-language analogues of this term:
NPV. It stands for net present value. This is the most common and widely used concept. It is the one used in computer programs such as Excel.
NPV (net present value). When using the NPV method, cash flows are first discounted and then evaluated. Therefore, this name reflects the meaning of the calculation operation well.
NPV (Net Present Value). This concept is a breakdown of the calculation process. All income and expenses are ultimately compared to the value of money.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free: