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what would be the NPV of this calculation?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 11EA: How much would you invest today in order to receive $30,000 in each of the following (for further...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

- If the CFs in this problem were part of a Net Present Value (NPV) calculation, what would be the NPV of this calculation?

- Calculate the PV of CFs?


Years:	0	1	2	3	4	5
CF $s	(10000)	1500	1500	3000	4500	5000
Rate:	12.00%

If the CFs in this problem were part of a Net Present Value (NPV) calculation, what would be the NPV of this calculation?

Calculate the PV of the CFs

You are given CFs are at the end of the year.
Years:
1
2
3
4
(10000|
CF $s
1500
1500
3000
4500
5000
Rate:
12.00%
If the CFs in this problem were part of a Net Present Value (NPV) calculation, what would be the NPV of this calculation?
Calculate the PV of the CFs

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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