Chapter Outline

This chapter focuses on the evaluation of business investment decisions using both calculator and formula approaches. It’s designed to guide readers through the processes of Discounted Cash Flow (DCF) and Net Present Value (NPV) calculations, fundamental concepts in assessing the value of potential investments. The chapter is divided into sections that address these calculations through financial calculators and theoretical formulas.

Introduction to Investment Decision Concepts: Before diving into specific methodologies, this section provides an overview of the principles underlying business investment decisions, emphasizing the importance of DCF and NPV calculations in determining investment viability.

Calculator Approach

5.1 Discounted Cash Flow (DCF) – Calculator Approach: This part provides an overview of the principles underlying business investment decisions and demonstrates how to calculate the DCF of potential investments using a financial calculator.

5.2 Net Present Value (NPV) – Calculator Approach: This section focuses on calculating the NPV of investments using a financial calculator.

Formula Approach

5.3 Discounted Cash Flow (DCF) – Formula Approach: This section explains DCF calculation using compound and annuity formulas.

5.4 Net Present Value (NPV) – Formula Approach: This section discusses NPV calculation, offering a comprehensive look at how future cash flows are discounted to their present value using compound and annuity formulas to assess investment opportunities.

5.5 Terminology and Glossary of Symbols: Concluding the chapter, this section provides definitions and explanations of key terms and symbols used throughout the chapter.