NPV of $1 Million for a Project Means What

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NPV of $1 Million for a Project Means What
C.J.Shah, Sales, United States

If a NPV of one project is $1 million, what does it mean to an investor?

Hennie Stander, Accountant, South Africa
We are taught that if a project shows a positive NPV it should be accepted as it is forecasted that the project will generate a positive inflow of cash over its lifetime after future cash flows have been discounted (assuming ones assumptions are accurate). However, the $1m NPV should also be looked at as a percentage of the initial outlay and compared in this manner to other projects which the investor might be forced to choose from.



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