Describe the Method of Calculating the Net Present Value (NPV)

question 15

Essay

Describe the method of calculating the net present value (NPV) in Excel.

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Definitions:

Interest Portion

The part of a payment or financial operation that represents interest, separate from principal repayment or other components.

Principal Portion

The part of a loan payment that reduces the outstanding balance of the loan, as opposed to the part that covers interest charges.

Contractual Obligation

A legally binding agreement between parties that specifies actions or non-actions that are required to be completed.