If investment funds are limited, the net present value of one project should not be compared directly to the net present value of another project unless the initial investments in these projects are equal.

Net Present Value

A financial measurement that calculates the value of a project or investment by discounting future cash flows to the present.

Investment Funds

Investment Funds are pooled investment vehicles, managed by professionals, where investors can place their money to gain returns over time through diverse portfolios.

Initial Investments

The initial capital outlay required to start a project, purchase assets, or establish business operations.