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Net present value |
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Definition of Net present valueNet present valueA discounted cash flow methodology that uses a required rate of
Related Terms:net present value methoda process that uses the discounted Net present value (NPV)The present value of the expected future cash flows minus the cost. Net present value (NPV)A discounted cash flow technique used for investment appraisal that calculates the present value of future cash flows and deducts the initial capital investment. net present value (NPV)Equals the present value (PV) of a capital investment Net Present Value (NPV)The present value of all future cash inflows minus the present value net present value (NPV)the difference between the present values of all cash inflows and outflows for an investment project net present value (NPV)present value of cash flows minus initial investment. Net Present Value (NPV) MethodA method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment. Net present value of future investmentsThe present value of the total sum of NPVs expected to result from Net present value of growth opportunitiesA model valuing a firm in which net present value of new Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. Net adjusted present valueThe adjusted present value minus the initial cost of an investment. Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity capital budgetingRefers generally to analysis procedures for ranking Cash value added (CVA)A method of investment appraisal that calculates the ratio of the net present value of an Cost-benefit ratioThe net present value of an investment divided by the investment's initial cost. Also called Crossover rateThe return at which two alternative projects have the same net present value. discounted cash flow (DCF)Refers to a capital investment analysis technique Equivalent annual benefitThe equivalent annual annuity for the net present value of an investment project. Equivalent annual cash flowAnnuity with the same net present value as the company's proposed investment. Extraordinary positive valueA positive net present value. Internal rate of returnDollar-weighted rate of return. Discount rate at which net present value (NPV) Internal rate of return (IRR)A discounted cash flow technique used for investment appraisal that calculates the effective cost of capital that produces a net present value of zero from a series of future cash flows and an Multiple rates of returnMore than one rate of return from the same project that make the net present value Net advantage of refundingThe net present value of the savings from a refunding. Net advantage to leasingThe net present value of entering into a lease financing arrangement rather than NPVSee: net present value. NPVSee net present value. Present value of growth opportunities (NPV)net present value of investments the firm is expected to make present value of growth opportunities (PVGO)net present value of a firm’s future investments. profitability indexRatio of net present value to initial investment. Value additivity principalPrevails when the value of a whole group of assets exactly equals the sum of the Account ValueThe sum of all the interest options in your policy, including interest. Accumulated ValueAn amount of money invested plus the interest earned on that money. approximated net realizable value at split-off allocationa method of allocating joint cost to joint products using a Benefit ValueThe amount of cash payable on a benefit. Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible Book valueA company's book value is its total assets minus intangible assets and liabilities, such as debt. A BOOK VALUEAn asset’s cost basis minus accumulated depreciation. Book ValueThe value of an asset as carried on the balance sheet of a Book valueAn asset’s original cost, less any depreciation that has been subsequently incurred. book valuenet worth of the firm’s assets or liabilities according book value and book value per shareGenerally speaking, these terms BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Book Value per ShareThe book value of a company divided by the number of shares business-value-added activityan activity that is necessary for the operation of the business but for which a customer would not want to pay CAPITAL IN EXCESS OF PAR VALUEWhat a company collected when it sold stock for more than the par value per share. Carrying valueBook value. Cash-surrender valueAn amount the insurance company will pay if the policyholder ends a whole life Cash Surrender ValueThis is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications. Cash Surrender ValueBenefit that entitles a policy owner to an amount of money upon cancellation of a policy. Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s Performance presentation Standards Implementation Conversion valueAlso called parity value, the value of a convertible security if it is converted immediately. cost presentationthe approach to product costing that determines Economic Value Added (EVA)Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge economic value added (EVA)a measure of the extent to which income exceeds the dollar cost of capital; calculated economic value added (EVA)Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Exercise valueThe amount of advantage over a current market transaction provided by an in-the-money Exit valueThe value that an asset is expected to have at the time it is sold at a predetermined Expected valueThe weighted average of a probability distribution. Expected ValueThe value of the possible outcomes of a variable weighted by the Expected value of perfect informationThe expected value if the future uncertain outcomes could be known Exposure nettingOffsetting exposures in one currency with exposures in the same or another currency, Face valueSee: Par value. Face ValueThe nominal value of a security. Also called the par value. Face valueThe maturity value of a security. Also known as par value, face valuePayment at the maturity of the bond. Also called par value or maturity value. Face ValueThe payoff value of a bond upon maturity. Also called par value. See principal. Face ValueThe nominal value which appears on the face of a document recording an entitlement, generally an amount of money that has to be repaid on the maturity of a debt instrument. Fair market valueThe price that an asset or service will fetch on the open market. Fair Market ValueThe highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact. Fair ValueThe amount at which an asset could be purchased or sold or a liability incurred or Firm's net value of debtTotal firm value minus total firm debt. Future valueThe amount of cash at a specified date in the future that is equivalent in value to a specified Future ValueThe amount a given payment, or series of payments, will be worth future valuethe amount to which one or more sums of Future valueThe value that a sum of money (the present value) earning future valueAmount to which an investment will grow after earning interest. Future ValueThe amount to which a payment or series of payments will grow by a given future date when compounded by a given interest rate. FVIF future value interest factor. International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Internet business modela model that involves intraneta mechanism for sharing information and delivering data from corporate databases to the local-area network (LAN) desktops Intrinsic value of a firmThe present value of a firm's expected future net cash flows discounted by the Intrinsic value of an optionThe amount by which an option is in-the-money. An option which is not in-themoney Investment valueRelated:straight value. Liquidation valuenet amount that could be realized by selling the assets of a firm after paying the debt. Liquidation ValueThe net proceeds (after taxes and expenses) of selling the assets liquidation valuenet proceeds that would be realized by selling the firm’s assets and paying off its creditors. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Market value1) The price at which a security is trading and could presumably be purchased or sold. Market valueThe price at which a product or service could be sold on the open market. Market ValueA quoted market price per unit times the number of units being valued. Synonymous market value addedMarket value of equity minus book value. market-value balance sheetFinancial statement that uses the market value of all assets and liabilities.
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