[ See also Net Present Value @ Wikipedia ]
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NPV = \sum_{t=0}^N \frac{R_t}{(1+i)^t} = R_0 + \sum_{t=1}^N \frac{R_t}{(1+i)^t} |
where
– time moment since the first investment,
Image Added – the discount rate, i.e. the return that could be earned per unit of time on an investment with similar risk
– total number of time steps| LaTeX Math Inline |
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| body | R_t = \rm Cash_{in}(t) - \rm Cash_{out}(t) |
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– the net cash flow at time step t. | LaTeX Math Inline |
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| body | R_0 = - \rm Cash_{out}(t=0) |
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– the initial investment at time step t = 0.
