Hey Bull,
The easy way to explain NPV:
We all expect that our $100 is worth more in 12 months. We then reverse the scenario. If we have $110 in 12 months, and we anticipate 10% growth, then that becomes the $100 NPV.
The only real difference is they are calculating the NPV over a number of years and providing the answer in todays dollars.
An expanded example:
Consistent growth of 10% over 3 years
Yr 3 = 133.10
Yr 2 = 121.00
Yr 1 = 110.00
Yr 0 = 100.00
So in three years, the company expects the income to be $133.10, but in todays dollar value at a growth rate of 10%, you get the $100.
Bull, just thought I'd expand on your comment so that those without any financial background, or new to the share market, understand what is meant by NPV.
Cheers,
L
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