[ See also Net Present Value @ Wikipedia ]
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,
– 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
– the net cash flow at time step t.
– the initial investment at time step t = 0.