💵Capital Budgeting Formulas

Present Value Factor

1 ÷ (1 + r)^n

What It Means

Used to discount future cash flows. r = rate, n = periods.

Initial Investment ÷ Annual Cash Inflow = Payback Period (years)

Average Annual Net Income ÷ Average Investment × 100 = ARR %

Σ (Cash Flow ÷ (1 + r)^n) - Initial Investment = NPV

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