The Net Present Value (NPV) uses the idea of the time value of money to evaluate the viability of an investment option tips. If an investment decision results in cash outflow at the initial stage and a series of cash inflows over a period of time, then the net present value of the cash flows can be calculated as the difference between the present value of the cash outflow and the sum of the present values of the inflows that accrue over a period of time. The discounting rate used in the calculation of the NPV is the required rate of return on the investment and therefore can be customized to reflect the risk in the market.
A positive NPV implies that the investment is worthwhile and a negative NPV indicates that the investment should be avoided. Good MCX tips must have a positive NPV. The NPV is the present value of the gain from an investment and the magnitude of the gain will help decide between different investment options, provided it is calculated at the name point in time. The ccontinue reading →