Investment in any asset creates wealth if the discounted value of the future cash flows...
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Investment in any asset creates wealth if the discounted value of the future cash flows exceeds the up-front cost. This simply put is the NPV idea that company managers and investors should only invest in projects or engage in transactions that have a positive net present value (NPV). They should avoid investing in projects that have a negative net present value. However, what about a case an example of a product like Tesla. The company which formed around 2009 was reporting a negative net income up until the third quarter of 2019. Do you think managers would be able to apply an investing decision based on NPV idea for such products?
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