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present value
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present value

See net present value.



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The weighted (by the probability of death for each age) sum of all the possible net present values gives us the expected net present value.
Next, the consultant should determine a range of net present values for the cash flows by adjusting the risk (remember our discussion of beta).
Assumption 2: Managers take all projects that they believe have positive net present values (including the perceived net present value of financing) and never take projects--including perquisite consumption-that they believe to have negative net present value.
 
 
 
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