Answer to Question #206329 in Management for Prince

Question

SUBJECT : PROJECT PLANNING AND CONTROL

1. Discuss the usage and application of Net Present Value Method of capital Budgeting ? (please give at least 2 points for each usage and application )

Answer 1

1. Net present value is primarily used in investment planning and capital budgeting to evaluate the profitability of a targeted project.
2. Net present value is also used to determine the current total weight of the future stream of transactions.
3. It is one of the capital budgeting methods applied to investigate possible physical asset projects in which the business intends to invest.
4. Net present value helps entrepreneurs to determine and consider the time value of their money. It also determines whether the project will be viable or not and estimates the payback period of the targeted project.