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The positive predictive value (PPV), or precision, is defined as = + = where a "true positive" is the event that the test makes a positive prediction, and the subject has a positive result under the gold standard, and a "false positive" is the event that the test makes a positive prediction, and the subject has a negative result under the gold standard.
Understanding Net Present Value (NPV) The net present value uses the present value of cash inflows and the present value of cash outflows to estimate the profitability of an investment or project ...
A positive net present value indicates that the projected earnings generated by a project or investment (in present dollars) exceeds the anticipated costs (also in present dollars). This concept is the basis for the Net Present Value Rule, which dictates that the only investments that should be made are those with positive NPVs.
Net present value, an economic standard method for evaluating competing long-term projects in capital budgeting National Popular Vote Interstate Compact , an initiative in the United States to elect the presidential candidate with the most votes nationwide
Calculating the net present value, , of a stream of cash flows consists of discounting each cash flow to the present, using the present value factor and the appropriate number of compounding periods, and combining these values. [1]
The discount factors (DF) of 0.9091,0.8264, etc. are generated from the 'compound interest' formula: DF = 1/ (1+ r) n. where r is the discount rate n is the forward year from current day = 0. It then becomes possible to reformulate a stream of profits and royalties to their PVs. The sum of PVs results in the Net Present Value (NPV).
The certainty equivalent approach does this by adjusting the cash-flow numerators of the NPV formula. Contrasting to both, PPV calculates the average NPV ( μ ) at the risk-free rate , penalizing it afterwards by subtracting " t " standard deviations of the NPV (tσ): P P V = μ − t σ {\displaystyle PPV=\mu -t\sigma }
However, NPV calculations require additional sophistication including maintenance of a discount rate, which leads most organizations to instead calculate CLV using the nominal (non-discounted) figures. Nominal CLV predictions are biased slightly high, scaling higher the farther into the future the revenues are expected from customers.