Before you start: Understand discounting and the timing of cash flows.
Try it
An investment costs 100 now and returns 110 after one period. At a 10% discount rate, what is its NPV?
Your reasoning, assumptions and units:
Apply it to your work
Describe a comparable situation. What evidence would you need before using this reasoning to make a decision?
Your example and next check:
Answer and reasoning
NPV = −100 + 110 ÷ 1.10 = 0. It meets that discount-rate threshold under the stated assumptions; this does not establish affordability or remove uncertainty.
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