Join Rudolph Rosenberg for an in-depth discussion in this video How to include intangible elements into NPV, part of Making Investment Decisions.
…NPV is a very easy investment evaluation technique…to use when it comes to money-related matters.…But many investments include also intangible…elements such as time, for example.…Sometimes, you will be investing money to gain more time.…Or you will be investing time, to get more money.…Or you will be even investing time, to get more time.…In any case, since time is not tangible, it can…be difficult to include it in an NPV.…And therefore, excludes a number of projects from the use of NPV.…
To be able to use NPV calculations on such projects, you…need to find a way to turn those intangible elements into money.…And then get back on the regular NPV path.…Sometimes it would be possible. In that case you will be able to use NPV.…And when it's not possible, you will have…to rely on other means to take the decision.…If we take the example of time.…A great way to monetize time, is to turn it into a salary equivalent.…For example, if it's your time that is invested, then you can calculate how…much the time is worth, if you were to get a salary on it.…
This course teaches the net present value (NPV) methodology, an investment evaluation formula used by countless publicly traded companies and financial analysts, in a way that makes it accessible and applicable to you—no finance background required. Rudolph Rosenberg explains what investments are, how they are measured, and what makes a good investment. Then he explores the NPV formula in depth, showing you how to evaluate your cash flows, choose a rate of return, and assess the risk of a particular investment. This all culminates in a look at how the principles of investment apply to three real-life scenarios that any individual or company might encounter.
- What is an investment?
- Understanding ROI
- What makes a good investment?
- Using the NPV formula
- Assessing risk
- Applying NPV to real-life situations