Net Present Value (NPV)
Another time value of money concept that has to do with serial payments is net present value, or NPV . This calculation is a more complex version of the basic present value calculation mentioned earlier. Under a net present value calculation, the present value of each future cash inflow and outflow is figured. Then the results are added to determine whether, in the present, the project has a positive value or negative value for a company or investor.
For example, if a company was going to invest $10,000 today, receive $4,000 each of the next three years, and then have to pay an additional $1,000 to exit the investment, an investor or company would want to know if they’re losing money when the time value of money is considered.
Assuming an 8% annual interest rate, the calculation may look something like this, with the present values of money flowing out represented by negative numbers and money flowing in represented by positive numbers:
Cash Flows
Present Value
Initial Investment
– $10,000
– $10,000
Year #1 Payment
+ $4,000
+ $3,704
Year #2 Payment
+ $4,000
+ $3,429
Year #3 Payment
+ $4,000
+ $3,175
VIDEO
Since you're reading about Series 65: Net Present Value (NPV) , you might also be interested in:
Please Enable Javascript
TESTIMONIALS
What are people saying?
I passed my Series 65 today with an 80, first effort! Not only was the material well laid out, but if it's possible, the Solomon prep made the material palatable and understandable. Amazing!!! I have used Kaplan in the past as well as STC, which are both very good, but I chose Solomon because it had audio downloads. With an hour commute, I was able to study during that otherwise wasted time. Additionally, the "Ask the Professor" and live chat features were excellent!! Questions were answered virtually immediately by personal email and the author/owner Jeremy Solomon actually called me to help me and cheer me on! I didn't think this kind of customer service and general human kindness existed anymore. He even asked me to let him know personally my results which, thanks to this program, I am on the other side of this very difficult exam. Thank you Solomon Exam Prep!!!!!
Carol K. Gallagher
TIAA-CREF
Upstate New York
I have been extremely happy with your book series. I was able to pass the Series 66 and Series 65 with flying colors on the first try! Thanks again.
Christian Brown, Financial Decisions Group
I passed the Series 65 this afternoon! Your online test simulation was terrific. Thanks so much!
David G.,
San Francisco, CA
I have used other providers in the past for the 62 and
decided to try something new this time due to passing that by a thin margin out
of luck. I passed the 65 first try with
an 88% all thanks to Solomon Exam Prep and its effective 5-week program. The book is thorough and easy to follow and
the endless question bank with detailed explanations ensures that you will
never see a repeat and never have to worry about question memorization (which
is CRITICAL when you are assessing how ready you are based off of practice
tests). The quizzes and exams require a
deeper level of understanding, unlike other providers that test you with
elementary questions only to leave the actual exam to feel unpleasantly
difficult. The practice quizzes provide
a very convenient way to focus on your weak areas and the full simulation exams
feel very much like the actual test and in my experience, made the real exam
seem surprisingly easy. The practice
questions also reinforce important test taking skills and taught me to approach
questions in a more disciplined way than before. Finally, I gave the “ask the professor”
function a try and they are VERY responsive and clearly have a passion for
seeing their clients succeed. I couldn’t
be happier with this program and even though you might hear about the other
test prep companies more often, Solomon IS the most effective.
Bates Parsons, Denver, CO
My oldest son purchased your Solomon audio exam guide to pass his Series 7, and I did the same for the Series 65 exam at his recommendation. Although I am 62 and have been out of college for forty(40) years, I passed my Series 65 exam on my first try. This would NOT have been possible without your excellent study materials. Thank you! for the service you provide to all aspiring test takers where so much is on the line!
Most Sincerely,
David Hartzell
Cornell Capital Management
David Hartzell, Cornell Capital Management, New York
I am so happy to say that took my Series 65 Exam and passed on my first attempt! All thanks must go to Solomon Exam Prep and its materials. I read the Study Guide cover to cover 3 times, took notes and took what felt like endless practice quizzes, but I must say that I found the practice questions more difficult than the actual exam! I cannot recommend Solomon Exam Prep enough!
Kevin Blanchard, Meche and Associates. Breaux Bridge, LA
Read more reviews
