Net Present Value Method

The net present value method is the classic economic method of evaluating the investment proposals. It is discounted cash flow technique that explicitly recognizes the tine value of money. It correctly postulates that cash flows arising at different time periods differ in value and are comparable only when their equivalents present values are found out. The following steps involved in the calculation that value:

• Cash flows of the investment project should be forecasted based on realistic assumptions.

• Appropriate discount rate should be identified to discount the forecasted cash flows. The appropriate discount rate is the projects opportunity cost of capital, which is equal to the required rate of return expected by investors on investments of equivalent risk.

• Present value of cash flows should be calculated using the opportunity cost of capital as the discount rate.

• It should be found out by subtracting present value of cash outflows from present value of cash inflows. The project should be accepted if net present value is positive.

Project acceptance rule using net present value

It should be clear that the acceptance rule using that method is to accept the investment project if its value is positive and to reject it if the net present value is negative. Positive value contributes to the net wealth of the shareholders, which should result in the increased price of a firms share. The positive net present value will result only if the project generates cash inflows at a rate higher than the opportunity cost of capital. A project with zero value may be accepted. A zero value implies that project generates cash flow at a rate just equal to the opportunity cost of capital.

The net present value acceptance rules are:

• Accept the project it is positive

• Reject the project it is negative

• May accept the project when it is zero

The value can be used to select between mutually exclusive projects; the one with the higher value should be selected. Using the net present value method, projects would be ranked in order of that; that is, first rank will be given to the project with higher positive value and so on.

Importance of the Net Present Value

It is the true measure of investments profitability. It provides the most acceptable investment rule for the following reasons:

• Time value. It recognizes the time value of money-a $ received today is worth more than a $ received tomorrow.

• Measure of true profitability. It uses all cash flows occurring over the entire life of the project in calculating its worth. Hence, it is a measure of the projects true profitability. That method relies on estimated cash flows and the discount rate rather than any arbitrary assumptions, or subjective considerations.

• Value additively. The discounting process facilitates measuring cash flows in terms of present values that is in terms of equivalent, current $. Therefore, the net present values of projects can be added.

• Shareholder value. That method is always consistent with the objective of the shareholder value maximization. This is the greatest virtue of the method.

Limitations of Net Present Value

The net present value method is a theoretically sound method. In practice, it may pose some computation problems.

• Cash flow estimation. That method is easy to use if forecasted cash flows are known. In practice, it is quite difficult to obtain the estimates of cash flows due to uncertainty.

• Discount rate. It is also difficult in practice to precisely measure the discount rate.

• Mutually exclusive projects. Further, caution needs to be applied in using that method when alternative projects with unequal lives, or under funds constraint are evaluated. The net present value rule may not give unambiguous results in these situations.

• Ranking of projects. It should be noted that the ranking of investment projects as per that rule is not independent of the discount rates.

Unique Gift for a Presentation

The best place to go to buy something special would be everywhere! You will find gifts wherever you go; in a bazaar, a mega sale or in a tag sale. There is bound to be something here that will be unique and special, and thus worth buying. You know when a loved one’s function or birthday will be around the corner; so you may as well buy something well in advance, to be gifted on the special day.

It is not that you have to always present something materialistic; there are many other ideas for a gift. You could present painting lessons or art history courses to the art enthusiast or perhaps a gift certificate of a shopping mall. Welcome services are always welcome as a gift! The tired housewife and mother will consider a body massage and some baby-sitting time the best gifts of the world! No gift could resist the opportunity of spending some quality time on oneself. Besides baby sitting and body massage, you could also present a fruitful day in the spa with all treatments or the services of a chef for a day to rid the mother of cooking for a day. All these ideas are booming ideas for the tired and busy mother.

Some people have a hobby of collecting antiques and artifacts. You could keep your eyes out for rare prints of books or notes, books that are no longer in circulation or antiques in internet auction sites and chat rooms. It is not that you spend loads on the antique; just buy something small, rare and memorable. If you love making things, you can always create gifts to be gifted. You could perhaps bake a lovely cake, or knit a pair of gloves or socks for your granny. Candle making is rampant today, so use your imagination to produce a candle that is attractive to the eye of the admirer.

If you are really lost on the perfect, unique gift for your loved one, you could always get the help of the internet. You could just follow links, till you find something interesting that could be gifted. If you are not the creative type to make something special as a presentation, you can still create something special for a gift. All you have to do is to approach a craftsman who makes unique gifts. You give an idea of the kind of gift you would like to make to your loved one, and the craftsman will definitely think up of something special to create for you.

Learn to mix and match, to create something new. Combine two items to create a single, stunning gift as a presentation. The unique lamp looks better with that lamp shade that you bought at a tag sale; use it together as a gift for your loved one. There is basically no steadfast rule for unique gifts; just use your imagination. For inspiration, you could leaf through magazines. But perspiration is needed for creating the unique gift!

How to choose the best corporate gifts in an organization in an efficient way

As a business owner, you should know that it’s important to stay on top of your business’s holiday gift-giving. Think about gifts that will stand out and make an employee feel like they are being recognized, or bring pride to the company as a whole. It’s also important to consider different budgets, departments (e.g. accounting, sales, etc.), and the number of people you will be giving to. The question is how do you choose the best corporate promotional gift, corporate gifts for your employees?

Here are a few things that you should keep in mind while buying gifts to communicate your appreciation to the team:

V Know what your budget is and stick to it.
When purchasing gifts for your employees, make sure you know your budget and stick to it. It’s not uncommon for a small business to have a tight budget during the holiday season; this tends to happen when a business is still recovering from year-end or they are trying to save up for the next year. When you’re on a strict budget, it’s important to pick out thoughtful and cost-efficient gifts.

V Consider a custom-made gift.
For those who have a larger budget, it’s best to consider purchasing custom-made gifts for your employees.

V Be timely
For every reason, be on time with your purchases. Not only because Christmas is a season of giving, but also because the office team needs to see their gifts at the right time, especially if it’s going to be a long looming holiday. If you’re still thinking about what to buy, it might be too late.

V Be original
Don’t go for the usual flowers and chocolates or custom mugs that are available everywhere for this holiday season. Instead, go for something that is a little more personal and creative. Your employees will appreciate the effort you put in to find a present that speaks to their interests and styles.

V Be meaningful
Just because you’re running a business does not mean that your employees don’t deserve to feel appreciated. In fact, it is even more important to show appreciation for a team that has not only put in their time and hard work, but also their interest and efforts in making the workplace better.

V Be thoughtful
When you get so caught up in planning holiday events and dinner parties, it’s easy to forget that the gift you are going to give should be something they actually like or will use.

How gifting can vary to each person in an organization:
If you’re looking to make a fantastic impression on your next client, employee, or business partner with a corporate gifts, it can be tough to know where to start. With so many choices available, it’s difficult to know what will be the most appreciated by each individual recipient. That’s why we’ve put together this guide for how to choose the best corporate gifts for each type of person on your list!

V Employees
Corporate gift options for employees can vary a lot by industry. If your company has an extensive product line, you might consider purchasing a corporate gift that showcases all of your products. You can also consider giving gifts like mementos from a recent trip or a promotional item from the company that was most useful to the recipient.

V Business Partners
When it comes to business partners, corporate gifts for people in business will often be those that reflect their professional accomplishments and experiences. Give a gift that showcases their achievements and provides a way for them to remember their work with your company. You can order personalized mugs, glasses, or books that contain photos and details of the work they’ve done.

V Clients
When it comes to corporate gifts for clients, you’ll want something that’s useful in their personal lives as well as in their professional lives. For example, purchasing a gift card is an excellent idea because they can use it for travel or entertainment that will help alleviate stress from the business. You can also consider giving a gift that reflects the company or industry they are in. For example, if they are in construction, you can buy a gift that showcases another construction project, such as a photo book of one of your completed projects.

Ending note:
In about a month, you’ll be scrambling to buy gifts for the hardworking team at your office. Instead of scrambling, In this blog, we recommended you do some prep work by considering some factors that will help make this year different from any other.