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Use of returns could be possibly arithmetic average or geometric average but geometric common is much more proper then arithmetic common as arithmetic typical is reflecting simple return more than a stretch of time on initial financial investment, regardless of the cash obtain from time period to time period. Nevertheless, geometric common displays compound return, that makes harmony of expenditure worth of past 12 months a basic principle base for calculation of future 12 months’s return Get the facts i.
The NPV, on the other hand, isn't going to take under consideration the depreciation because it is the expense of money. However, this is an element of your extended-phrase management charge, which also consists of the upkeep fee as well as the depreciation factor.
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