Operating Cash Flows

 Operating Cash Flows Joyce, Student (MBA), United States What is the NPV of a project that has cost of 52,125 and net cash flows of 12,000 per year for 8 years with a cost of capital of 12 percent?
 Operating CashflowsMukela Namushi Mubano, Accountant, Zambia12,000 x 4.968 (discount factor) = 59,616. NPV = 59,616 - 52,125 = 7,491 The project could be undertaken since the NPV is positive. However, one should not overlook the qualitative effects of deciding to go ahead with the project.

 NPV - Question on Calculating Discount FactorKATHRYN STEINER, MBA, Entrepreneur, United StatesHow did you calculate the discount factor of 4.968?

 Calculating Discount FactorMark May, Student (University), United StatesThe discount factor is arrived from (p/a, i, n) using compound interest table, where under p/a I = 12, n=8. Or in Excel =pv(i, n,-1) which is = pv(.12,8,-1) = 4.9676.

 Caculating Discount FactorKATHRYN STEINER, MBA, Entrepreneur, United StatesRight, finding the present value. Pv = fvn/(1+1)n Thanks for the clarification.

 NPV for Capital BudgetingManagement Fan, Analyst, PhilippinesThe IRR is 16% which is higher than the discount factor use - 12%. In addition your payback period is around 4.35 year.

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