The net figure is multiplied by the discount factor to determine a more realistic value called the discounted net, a value which, when accumulated over time, provides what is called the net present value. Thus it could be said of the example in Table 5.3 that this project will yield a net present value of $36,206.90 in year 3. However, the point at which payback is achieved has been pushed one year further into the future, compared with the non-discounted example. This "extra" year for the investment to yield a return is an important consideration for the portfolio management team.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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