- Related Questions & Answers
- Write the difference between present value and future value.
- How to calculate net present value using Net present value (NPV)?
- Differentiate between discounted Net present value and Internal rate of return.
- Write the difference between Net operating income and net income.
- Write the difference between EBITDA and net income.
- Test if the HTML attribute tabindex is present and get the value
- Present date as default value in a table
- Difference between book value and market value.
- Difference between C# and .Net
- Difference between numbers and string numbers present in an array in JavaScript
- Check if a value is present in an Array in Java
- What is the result of count function in the NULL value present in DB2 table?
- Present value of money is 2500, which is invested at 10% and time of investment is 2 years. Calculate the future value.
- Explain the custom value types in .NET
- Write the difference between debentures and bonds.

- Selected Reading
- UPSC IAS Exams Notes
- Developer's Best Practices
- Questions and Answers
- Effective Resume Writing
- HR Interview Questions
- Computer Glossary
- Who is Who

The major differences between present value and net present value are as follows −

Sum of discounted value of cash flow at a particular discounting rate.

Measures future cash flows today.

Does not measures additional wealth.

Does not provide any information about incremental value of a project/investment.

Present value = Future value / (1 + r)^n.

Calculates present value of future cash flow.

Easier to use.

Uses time value of money concept.

Decision making by individuals.

Sum of discounted value of future cash flows net of initial investments made by the company.

Measures value of a project.

Calculates additional wealth generated.

Calculates incremental value.

Net present value = present value of future cash flows – initial investment.

Relevant in making investment decisions.

Complex concept.

Derived from present value concept.

Mostly used by companies in making investment decisions.

Advertisements