What is NPV? What is the difference between micro and macroeconomics?

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NPV stands for Net Present Value, which is a financial metric used to determine the profitability of an investment.

NPV is calculated by subtracting the initial investment from the present value of expected cash flows.
A positive NPV indicates that the investment is profitable, while a negative NPV suggests it is not.
NPV takes into account the time value of money, as it discounts future cash flows to their present value.
It is commonly used in capital budgeting to evaluate investment projects.
For example, if a project has an initial investment of $10,000 and is expected to generate cash flows of $3,000 per year for 5 years, with a discount rate of 10%, the NPV can be calculated as follows: NPV = ($3,000 / (1 + 0.10)^1) + ($3,000 / (1 + 0.10)^2) + ($3,000 / (1 + 0.10)^3) + ($3,000 / (1 + 0.10)^4) + ($3,000 / (1 + 0.10)^5) - $10,000

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