NPV formula explained
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
where CFt is the expected cash flow at period t, k is the project's cost of capital, and n is its life.
- Cash outflows are treated as negative cash flows since they represent expenditures of the company to fund the project.
- Cash inflows are treated as positive cash flows since they represent money being brought into the company.
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