nav , npv

Answers were Sorted based on User's Feedback



nav , npv..

Answer / 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

nav , npv..

Answer / ben c

Slight correction on Karthik K:

t - the time of the cash flow, whereas t(now) = 0

...

If NPV > 1 the investment would add value to the firm.
the project may be accepted.

If NPV < 1 the investment would subtract value from the
firm.

If NPV = 1 the investment would neither gain nor lose value
for the firm

Is This Answer Correct ?    4 Yes 1 No

Post New Answer

More Accounting AllOther Interview Questions

how will i develop my fears in interviewd?

0 Answers  


What is State Cheque?

3 Answers  


What is an auction?

1 Answers   Mellon,


what is the meaning of preliminary expenses and how you shown in balance sheet

50 Answers   Banking, BPL, CA, Capital IQ, Chartered Accountant, First Midwest Bank, GE, Glass Wall Systems, Ocwen, Siemens,


Using only five 3's (can use any operators)how do you get the value as 51.

1 Answers  






EXPAND___________ILO

4 Answers  


What do you mean by preliminary expenses & what are types or Personal,real and nominal accounts (give some examples of it)

3 Answers  


EXPAND______________RDP

2 Answers  


what are accounting concepts?,what is the use of commerce?,what is accounting conversation?

1 Answers  


what is the Full form of SAS like CA?

11 Answers  


what is the finallizition account

1 Answers  


we are run construction (residence & commercial)last year we are sale 4 flats (16 flats apartment) registration value example:10.75 * 4 = 43.00 but we are collected from customers 45.00 total so 45 - 43 = 2.00 this amount we are booking additional agreements work amount (income)because we are standing sub contractors expendeture side 2.00, we are service tax paid or not ?

0 Answers  


Categories