Using the Net Present Value (NPV) in Financial Analysis

The Net Present Value (NPV) is a profitability measure we use to figure out the present value of all expected future cash flows a project or investment will generate, including the initial capital we invest. It shows us the difference between the current value of cash inflows and outflows over a period. Net Present Value […]

Dividend Discount Model in Financial Analysis

Introduction to the Dividend Discount Model The Dividend Discount Model (DDM) is used to estimate the price of a company’s stocks. The model is based on the theory that the present value of the stock is equal to the present value of all future dividend payments when discounted back to the present. If the present […]

Time Value of Money Explained

Introduction To understand the Time Value of Money, imagine you were offered 100 euros now or 100 euros in three years, what would you prefer? If you are like me, you’d probably prefer the money now. But why is that, when a 100 euros has the same value now and in the future? Having it […]