Calculating Net Present Value for Investment Projects

The video tutorial explains how businesses can use net present value (NPV) to evaluate investment projects. It compares NPV with other appraisal methods like payback period and average rate of return, highlighting NPV's ability to account for both timing and size of cash flows. The tutorial provides a detailed calculation example and demonstrates how NPV can guide investment decisions by comparing projects.

Describe how cash flow payments affect the net present value calculation.

What is the significance of the discount rate in calculating net present value?

How does the net present value reflect the time value of money?

What is the impact of timing on the value of cash flows in investment projects?