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How to Calculate Net Present Value: Definition, Formula & Analysis

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Net present value refers to the concept that:

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1. Why is net present value important to companies?

2. Sarah is trying to determine the NPV of a simple one-time payment. Which table should she use?

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About This Quiz & Worksheet

This worksheet and interactive quiz will test your understanding of net present value (NPV). Practice questions will address calculating single and multiple payment NPVs as well as their importance.

Quiz & Worksheet Goals

In this quiz, questions will inquire regarding:

  • Concepts referred to by net present value
  • Computing simple NPV into a payment
  • Importance of NPV
  • Present value of investments
  • Calculating current value of payments over time

Skills Practiced

Students will exemplify their skills in the following:

  • Problem solving - use acquired knowledge to solve for net present value in practice problems
  • Interpreting information - verify that you can read information regarding the importance of NPV and interpret it correctly
  • Reading comprehension - ensure that you draw the most important information about net present value from the related lesson
  • Knowledge application - use your knowledge to answer questions about computing simple NPV

Additional Learning

For further information on this topic, be sure to study the accompanying lesson titled How to Calculate Net Present Value: Definition, Formula & Analysis. This lesson covers the following goals:

  • Differentiate between simple and multiple year NPV
  • Explain how to calculate both types of NPV
  • Relate what you've learned in the lesson to real-world situations
  • Solve for NPV in practice problems given in the lesson
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