Net Present Value
vs.
Expected Present Value
The PMP exam now includes one or more questions regarding the difference between the above terms. Unfortunately, the latter term is used in a number of ways, and we cannot tell with certainty what usage the author of the question(s) has in mind.
Expected present value most often has to do with the valuation of a business rather than of a project. The calculation is the same. It may be applied to projected cash flow or profit. It is sometimes used when a firm is evaluating the purchase of another firm to determine its value.
Another related term is expected net present value, which is determined by deducting the investment from expected present value.
Any student who has additional light to shed on the subject is invited to email norris@TheCourse.us.
