Volume 9, Issue 3, November 2014, Pages 1188–1195
Md. Jahangir Alam Siddikee1
1 Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, Bangladesh
Original language: English
Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
The capital budgeting techniques have the real life impact in case of decision making process. The available techniques are traditional techniques: Pay Back Period (PBP), Average Rate of Return (ARR) and discounted techniques: Net Present Value (NPV, Internal Rate of Return (IRR), Profitability Index (PI) and Discounted Pay Back Period (DPBP). Here researcher has introduced a new capital budgeting technique: Net Future Value (NFV). The researcher focused NFV basis on borrowing phenomenon and investing or lending phenomenon. The researcher has characterized this technique that if the Net Future Value (NFV) of a borrowing project is negative, the project has the positive worth for the outsider investor(s) and /or the outsider lender(s) and negative worth for the borrower(s) otherwise positive NFV creates negative worth for the investor outsiders and /or the lender outsiders and positive worth for the borrower(s).And if the NFV of an investing or lending project is positive, the project has the positive worth for investor(s) or lenders and negative worth for the borrower(s). The researcher viewed NFV as the compounding technique of capital budgeting. The researcher found the positive relationship between NPV and NFV in case of investing or lending project or investor or lender perspective but negative relationship between NPV and NFV for borrowing project or borrower or debtor perspective.
Author Keywords: NFV, NPV, technique, borrowing, investing, relationship and project.
Md. Jahangir Alam Siddikee1
1 Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, Bangladesh
Original language: English
Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
The capital budgeting techniques have the real life impact in case of decision making process. The available techniques are traditional techniques: Pay Back Period (PBP), Average Rate of Return (ARR) and discounted techniques: Net Present Value (NPV, Internal Rate of Return (IRR), Profitability Index (PI) and Discounted Pay Back Period (DPBP). Here researcher has introduced a new capital budgeting technique: Net Future Value (NFV). The researcher focused NFV basis on borrowing phenomenon and investing or lending phenomenon. The researcher has characterized this technique that if the Net Future Value (NFV) of a borrowing project is negative, the project has the positive worth for the outsider investor(s) and /or the outsider lender(s) and negative worth for the borrower(s) otherwise positive NFV creates negative worth for the investor outsiders and /or the lender outsiders and positive worth for the borrower(s).And if the NFV of an investing or lending project is positive, the project has the positive worth for investor(s) or lenders and negative worth for the borrower(s). The researcher viewed NFV as the compounding technique of capital budgeting. The researcher found the positive relationship between NPV and NFV in case of investing or lending project or investor or lender perspective but negative relationship between NPV and NFV for borrowing project or borrower or debtor perspective.
Author Keywords: NFV, NPV, technique, borrowing, investing, relationship and project.
How to Cite this Article
Md. Jahangir Alam Siddikee, “Invention of NFV Technique and Its Relationship with NPV,” International Journal of Innovation and Applied Studies, vol. 9, no. 3, pp. 1188–1195, November 2014.
