# Concerning NPV:8.5 Net Present ValueDescribe how NPV is calculated and describe the information thisa.measure provides about a sequence of cash flows. What is the NPVcriterion decision rule?Why is NPV considered to be a superior method of evaluating the cashflows from a project? Suppose the NPV fora project's cash flows iscomputed to be \$2,500. What does this number represent with respectb.to the firm's shareholders?

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8.6 letters a b and c help_outlineImage TranscriptioncloseConcerning NPV: 8.5 Net Present Value Describe how NPV is calculated and describe the information this a. measure provides about a sequence of cash flows. What is the NPV criterion decision rule? Why is NPV considered to be a superior method of evaluating the cash flows from a project? Suppose the NPV fora project's cash flows is computed to be \$2,500. What does this number represent with respect b. to the firm's shareholders? fullscreen
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Step 1

Hi there, Thanks for posting the question. But as per Q&A guidelines, we should answer the first question only when multiple questions posted in single question. Hence, I'm answering question (a) below. Please repost the remaining question separately.

Step 2

Net present value is one of the discounted techniques in capital budgeting which is used to calculate the profitability of the project or investment. It is the difference of the present value of future cash inflows and initial cost of the project or investment over a period of the project.

Step 3

The following is the formula to calculate the net ... help_outlineImage TranscriptioncloseCF СЕ CF NPV =-CF (1+r) (+r) (1+r) Where, The net present value is NPV The initial cash outflow is CF The annual cash flow in year 1 is CF The annual cash flow in year 2 is CF The annual cash flow at the end of project life is CF The discount rate or rate of return is r fullscreen

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