Explain What Is Meant by a Novation

question 85

Essay

Explain what is meant by a novation.

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Definitions:

Net Cash Inflow

The difference between all cash receipts and all cash payments over a period of time, showing the net increase or decrease in cash.

Time Value of Money Concept

The principle that money available now is worth more than the same amount in the future due to its potential earning capacity.

Capital Investment Analysis

The process of evaluating and making decisions about capital expenditures or investments in projects that will have long-term implications for a business.

Net Present Value Method

A method used in capital budgeting to assess the profitability of an investment by calculating the present value of its expected cash flows minus the initial investment cost.