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Finance for managers Discussion 6

Finance for managers Discussion 6

Q There are a number of ‘metrics’ used for calculating ‘risk’ and ‘return’…consider NPV (net present value) as a measure of ‘return’…do you agree with this method as a means of determining the ‘value’ of a given project/investment…? Also, ‘risk’ is often measured by standard deviation and beta…’what’ value might either/both of those measures have in evaluating ‘risk’ to a given investment/project… Lastly, with regard to either ‘risk’ or ‘return’, feel free to address ‘other’ measures as generally used by the investment community..

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According to me, NPV (Net Present Value) can be regarded as the means of knowing the value of a provided investment/project. Hence, I do agree with the statement. Net Present Value can be referred to as the difference among the present value of inflows of cash and the present value of outflows of cash over the project life. The scale and quality of project/investment both are taken into account by the NPV. Therefore, Net Present Value is