Answer Posted / karthik k
NAV stands for Net Asset Value which indicates the unit
price of a stock or fund.
NAV of a fund = (asset + income - liabilites - expenses)/
(no of units outstanding)
Asset = Market value of investments+receivables + Accrued
income + other asset(i.e. income due but not received)
Liabilites=accrued expenses + payables + other liabilites.
------------------------------------------------------------
NPV stands for Net Present Value. which is defined as the
total present value (PV) of a time series of cash flows. It
is a standard method for using the time value of money to
appraise long-term projects. Used for capital budgeting,
and widely throughout economics, it measures the excess or
shortfall of cash flows, in present value terms, once
financing charges are met.
Therefore NPV is the sum of all terms , the formula is,
R suffix t divided by (1+i)power t
where
t - the time of the cash flow
i - the discount rate (the rate of return that could be
earned on an investment in the financial markets with
similar risk.)
Rt - the net cash flow (the amount of cash, inflow minus
outflow) at time t (for educational purposes, C0 is
commonly placed to the left of the sum to emphasize its
role as investment).
if NPV > 0 the investment would add value to the firm.
the project may be accepted.
if NPV < 0 the investment would subtract value from the
firm.
the project should be rejected.
if NPV = 0 the investment would neither gain nor lose value
for the firm.
We should be indifferent in the decision whether to accept
or reject the project. This project adds no monetary value.
Decision should be based on other criteria, e.g. strategic
positioning or other factors not explicitly included in the
calculation.
Is This Answer Correct ? | 5 Yes | 1 No |
Post New Answer View All Answers
what are micro-cap, small-cap, mid-cap, large-cap companies?
What are the benefits ofparticipation in a depository?
define bank Draft
Short Answer on ___________Finance Bill
How can I find out my credit rating score for free?
Plz Give the Inventry Accounting Procedure 1.Domestic Purchases ( VAT,CST,& Excise) 2.Import Purchases ( Direct Expences & Excise ) 3.When Will the Price Diffrence Entry Happen? 4.Cash Discount & Trade Discount On Purchases? 5.Domestic Sales ( VAT,CST,& Excise) 6.Export Sales ( Customes ,Excise ) 7.Cash Discount & Trade Discount On Sales?
pl send me SBI previous question papers for clerical post to my email id :jahnavi_devi@yahoo.com
what are the difference between banking institutions and financial institutions?
How can we calculate the total income of the company.
What is the basic difference between pledge, hypothication and mortgage????
which are company offering jobs in PORTFOLIO MANAGEMENT ?
Dear sir i had been called for ntpc interview and gd next month..please guide me for it!
You are working in a Company but due to certain reasons you were not able to complete the work given to you on time, so to write a Letter of Apology to your Senior regarding it.
In case of new admission of partner what will be the adjustment for the sharing ratios
what is meant by qurum