[ See also Net Present Value @ Wikipedia ]
NPV = \sum_{i=0}^n \frac{R_{ti}}{(1+r)^{t_i}} = R_0 + \sum_{i=1}^n \frac{R_{ti}}{(1+r)^{t_i}} |
where
– total number of time steps
– time passed since the first investment ( assuming that ),
– the discount rate, i.e. the return that could be earned per unit of time on an investment with similar risk
– the net cash flow at time step t.
– the volume of cash investment at initial time moment .