Please don’t make fun of me, I’m 24 playing catch-up in finance, but I am in love with Net Present Value. I learned about it six months ago and I think it’s great. Is it still the leading technique for project analysis? or even a leading technique? I’m sure what I learned was the very basic building blocks of the NPV, but is that what’s used to evaluate projects these days? such as real estate investments, new equipment, stocks, public projects, or any other decision between one or more investment/cashflow opportunities?
Other than computing a discount rate, what would hedging have to do with my NPV question? This forum sucks because it’s just 12-17 twats stroking eachothers egos… tough to get any straight answers without being told to give up on finance or some sarcastic joke that’s not even remotely funny… just my take
For project finance, NPV is still the primary method. There is also IRR, but it is not generally as good.
Figuring out the proper discount rate can be a challenge (usually it’s WACC, but even that requires some estimate of the cost of equity). Having reasonable projections on costs and cash flows is also a challenge.
Saying “I am in love with NPV” does sound a little strange, though, so if people are going to make fun of you, that’s like dumping bleeding flesh into a shark tank.
If you want to learn a little more on valuation, may I suggest googling for Damodaran’s website. There you find lots of material, the audio/videos for the actual MBA classes he does at Stern, and even a little app for IPhone/IPad that goes over some basics and allows you to try some valuation methods.
It’s all free, so the value is pretty good (lame pun intended)
its not my go to method of analysis, but i like using NPVs to backup my original findings. Its a great feeling when NPV using conservative inputs confirms my original thoughts. cannot do it for all companies though. not worth creating intricate models