<Dl> <Dd> N P V = ∑ n = 0 N C n (1 + r) n = 0 (\ displaystyle \ mathrm (NPV) = \ sum _ (n = 0) ^ (N) (\ frac (C_ (n)) ((1 + r) ^ (n))) = 0) </Dd> </Dl> <Dd> N P V = ∑ n = 0 N C n (1 + r) n = 0 (\ displaystyle \ mathrm (NPV) = \ sum _ (n = 0) ^ (N) (\ frac (C_ (n)) ((1 + r) ^ (n))) = 0) </Dd> <P> Note that in this formula, C 0 (\ displaystyle C_ (0)) (≤ 0) is the initial investment at the start of the project . The period n (\ displaystyle n) is usually given in years, but the calculation may be made simpler if r (\ displaystyle r) is calculated using the period in which the majority of the problem is defined (e.g., using months if most of the cash flows occur at monthly intervals) and converted to a yearly period thereafter . </P> <P> Any fixed time can be used in place of the present (e.g., the end of one interval of an annuity); the value obtained is zero if and only if the NPV is zero . </P>

What does the internal rate of return tell you