The Applications of NPV in Different Types of Markets

Abstract

The net present value of your project is the present value of the cash flows at the required rate of return compared to your initial investment. In practice, it is a method of calculating the return on investment for a project or expenditure. This paper introduces some major methods to evaluate investment risk but focuses on the characteristics of the NPV method. The applications of the NPV method in different fields are also introduced. Using data from the provided example question, I developed models of change in the transformation curve in the complete and incomplete market. The advantages, disadvantages, and limitations of NPV are also be analyzed. Some recommendations for using the NPV method is presented.