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4.3 - Coggle Diagram
4.3
If a higher discount rate is applied, how will it influence the NPV?
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Does the investment add value to the business? Or will the business pay more or less for the investment than its worth?
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Borrowed money received in the future is worth less then todays nominal value because of the discount rate such as:
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Decision Rule: NPV is the difference between the present value initial outlay and the present value of the future receipts
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