Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money for the best return. Net present value tells us ...

A company's net cash inflow is composed of sales, minus total fixed costs and total variable costs. Total fixed costs are those that do not fluctuate with output, and include annual depreciation costs ...

NPV calculates profitability by considering all cash flows and the time value of money. A positive NPV indicates a potentially profitable investment opportunity. NPV's effectiveness relies on accurate ...

The basic premise of finance is that money has time value -- a dollar in hand today is worth more than a dollar in the future. The study of finance seeks to make it possible to compare the value of a ...

An even cash flow of regularly scheduled payments defines an annuity. If you borrow money to start your business, the monthly payments are calculated using an annuity formula. Two basic annuity ...

Claire Boyte-White is the lead writer for NapkinFinance.com, co-author of I Am Net Worthy, and an Investopedia contributor. Claire's expertise lies in corporate finance & accounting, mutual funds, ...

Calculating the internal rate of return, or IRR, of an investment is a powerful tool for businesses. When a manager is faced with a capital intensive decision, IRR can quickly compare the financial ...