Net Present Value Profitability Accounting Essay
Accounting profit is a company's total profit, calculated according to generally accepted accounting principles GAAP. It includes the explicit costs of doing business, such as operations. The formula for net present value can be written in two ways: NPV, t 1nRt 1 i t. Where: Rt, the net cash inflows and outflows over a single period. i, The discounted interest rate or return that could be achieved alternatively. Since value is the present value of future cash flows, this makes these companies more valuable, all else being equal. Scuttlebutt Investor, ROE is an indicator of the rate of growth of shareholders' equity through business activities. Figure 7 shows how ROE is used in estimating investment method growth rates. Jawabannya, the payback period PB, net present value NPV, internal rate of return IRR, average return ARR, profitability index PI, discounted payback period DPB and return on investment ROI. PV of cash flow in. 4,000, 1 10 3, 3,005. So the sum of the PV of future cash flows will be: Profitability index of the project, 10,030, 10,000. According to the formula of the profitability index, it can be seen that the project will create an additional value of 1. every, in the project.