DEDUCTION Definition

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DEDUCTION is the act of deducting; subtraction. It is an amount that is or may be deducted, e.g. tax deductions.

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NET PRESENT VALUE (NPV) is a method used in evaluating investments, whereby the net present value of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated using a given discount rate, usually REQUIRED RATE OF RETURN. An investment is acceptable if the NPV is positive. In capital budgeting, the discount rate used is called the HURDLE RATE and is usually equal to the INCREMENTAL COST OF CAPITAL.

GRANTEE is the person or entity to whom property or assets are transferred.

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