6-3 Net present Value Net Present value- Present value of cash flows minus initial investments Opportunity Cost of Capital -Expected rate of return given up by investing in a project Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 6- 3 Irwin/McGraw-Hill Net Present Value Opportunity Cost of Capital - Expected rate of return given up by investing in a project. Net Present Value - Present value of cash flows minus initial investments