Respuesta :
The Net present value (NPV) calculation takes into account the fact that one dollar now is not worth one dollar tomorrow. Amounts of money today are worth more than equivalent sums of money in the future because they can be used to earn returns in the future (assuming positive returns are anticipated).
The value of such cash inflows is contrasted with the initial investment or cash outflow using the NPV method. A project is anticipated to be profitable if the NPV is positive (the discounted future cash flow exceeds the initial expenditure). The original investment is more than the projected cash flows if the NPV is negative.
The benefit-cost ratio (BCR), which can be expressed in monetary or qualitative terms, is a statistic that shows how the relative expenses and benefits of a proposed project are linked.
If a project's BCR is greater than 1.0, it is expected to give a company and its investors a positive net present value.
If a project's BCR is less than 1.0, it shouldn't be taken into consideration because its disadvantages exceed its benefits.
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