An enhanced refresher on discounted net present value computations with an additional focus on risk and uncertainty

Maggie Foley and Shuangjin Wang

American Journal of Economics and Sociology, 2024, vol. 83, issue 4, 737-740

Abstract: Discounted present value (DPV) calculations have appeared in textbooks as well as numerous peer‐reviewed journal articles. Such articles address a wide variety of topics/issues, ranging from migration to educational pursuit to investment in new plant and equipment to the NFL draft. Recognizing the remarkably versatile and useful tools that the DPV concepts are to valuation and intelligent decision‐making, some years ago, the Harvard Business Review published a discussion by Gallo of the derivation and uses of DPVs (and NPVs). This note extends and corrects the analysis in Gallo so as to make it more accurate and useful to the reader.

Date: 2024
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