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Write the equation for Net-Present-Worth Criterion?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section19.1: Present Value: Measuring The Time Value Of Money

Problem 1QQ

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Question

Write the equation for Net-Present-Worth Criterion?

Expert Solution

Step 1

Net present worth is the difference of the present worth of all cash inflows and the present worth of the cash outflows for a given period of time. It tells whether an investment on a project will be beneficial or not.

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