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Introducing the Net Present Value Profile

Author

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  • Bell, Peter

Abstract

The Net Present Value is an important statistic in the evaluation of investment opportunities. Analysts often consider the sensitivity of NPV to different parameters in an economic model, but always seem to consider the NPV of a project at the single instant before the project is launched. This short note introduces the idea of a NPV Profile, which shows how the NPV of a project changes over the life of that project. The note calculates the NPV Profile for a simplified cash flow model and briefly discusses how this statistic can be used to consider returns in possible takeover scenarios.

Suggested Citation

  • Bell, Peter, 2017. "Introducing the Net Present Value Profile," MPRA Paper 79764, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79764
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    More about this item

    Keywords

    Net Present Value; Project Valuation; Takeovers;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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