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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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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