Current Net Value Standard
It is one of the standards that depend upon and adopt the Discounting method to neutralize the time factor on the cash unit purchasing power, the change in the individual consumption behavior, legal and legislative amendments and the general atmosphere of the existing economic development.
Definition of the Current Net Value Standard
The Current Net Value Standard is defined as follows:
“The net cash flow generated by the project during its useful life
at a selected and calculated discounting rate, according to certain limitations and assumptions related to the banking interest indicators, profitability of the alternative opportunity of each cash inflows and cash outflows.
The current net value standard is worked out by this equation:
Current Net Value = Current Value of Inflows – Current Value of Outflows
At a suitable discounting rate (15% is approved as discounting rate in the United Arab Emirates as of the Fiscal Year 2005 and until date. There is a tendency to raise it to 20% due to the changes,banking conditions for providing facilities and guarantees and the increase of loans rate on such facilities).
Read more details about the Current Net Value here
Find more details on how to calculate the Current Net Value Standard
Read The most important advantages and disadvantages of the Current Net Value Standard in the original document here.
Monday, February 15, 2010
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1 comments:
A common use of financial ratios is when a lender determines the stability and health of your business by looking at your balance sheet.
Most businesses require an in-depth look at their financial structure.
Trade and Working Capital
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