APPLICATION OF NET PRESENT VALUE ANALYSIS TO SHORT-TERM PERSONAL FINANCIAL DECISIONS
DOI:
https://doi.org/10.5281/zenodo.20848518Abstract
Personal finance and financial literacy play an important role in promoting individual financial well-being
and sustainable socio-economic development. In modern conditions, individuals regularly make financial decisions related to
education, consumption, savings, investments, borrowing, and other aspects of personal financial management. Improving the
quality of such decisions requires not only financial knowledge but also the application of quantitative methods for evaluating
their economic efficiency.
The purpose of this study is to examine the applicability of the Net Present Value (NPV) method in personal finance and
to evaluate its usefulness as a tool for supporting financial decision-making by individuals and households. The study is based
on a review of academic literature on personal finance, financial literacy, and investment appraisal methods, as well as on the
analysis of several practical examples reflecting typical personal financial decisions.
The findings demonstrate that the NPV method can be effectively applied to a variety of personal financial decisions,
including investments in education, professional development, digital services, and income-generating assets. Particular
attention is paid to the influence of discount rates and future cash flow estimates on calculation results. The study shows that
the Net Present Value method contributes to more informed financial planning and supports rational financial decision-making.
The results confirm that the application of the NPV method may serve as an effective tool for improving financial literacy
and enhancing personal financial management practices.
Keywords
personal finance, financial literacy, Net Present Value (NPV), investment appraisal, financial decision-making, discounted cash flow analysis, time value of moneyReferences
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