Discounted Cash Flow, Net Present Value & Time Value of Money

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question 1 of 3

Investing money in a savings account or other investment opportunity instead of burying it in a hole in your backyard is consistent with which wealth building concept?

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1. What is the discounting of future cash flows from an investment opportunity called?

2. What calculation is used to evaluate the profitability of viable investment opportunities?

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About This Quiz & Worksheet

The quiz/worksheet combo can help assess your knowledge of discounted cash flow, net present value and time value of money. You will need to know what these financial principles mean and understand how they are used for the quiz.

Quiz & Worksheet Goals

These materials help gauge your knowledge of:

  • How the discount rate impacts the value of future cash flows
  • Project profitability index
  • Term referring to the discounting of future cash flows
  • Investing money in a savings account

Skills Practiced

  • Reading comprehension - ensure that you draw the most important details from the business lesson on NPV, DCF and time value of money
  • Information recall - access the knowledge you have gained regarding wealth building concepts
  • Knowledge application - use your knowledge to determine which calculation is utilized to analyze the profitability of viable investment opportunities

Additional Learning

You can keep learning about these financial topics thanks to the lesson, Discounted Cash Flow, Net Present Value & Time Value of Money. Use this lesson to:

  • Learn how to properly evaluate investment opportunities
  • Determine what time value of money is
  • Identify the equation for NPV
  • Review probability analysis
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