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More Complex NPV Comparison: Interrelated Projects

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Net Present Value (NPV)
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Rob, Australia

More Complex NPV Comparison: Interrelated Projects

How would I compare 3 projects - two have an NPV = $500,000 (over 9 years mixed stream of inflows and 20 years annuity, respectively) and one which is a lump of $490,000 cash right now?
 
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Michel de Baar
Senior Manager Business Development, Netherlands
 

NPV Comparison

If a project has a positive NPV, this means that the project has already returned the discount rate (when NPV is 0, the discount rate is already returned) and if you get additional NET funds out of the project, it seems to me more interesting to go for a project with a positive NPV and on top of it is even higher (not much) than the cash payment. Seems to me like you would have to choose all the project(s).

 

More on Net Present Value (NPV):
Summary
Discussion Topics
topic Re-evaluating an investment decision
topic Operating Cash Flows
topic Does the Net Present Value (NPV) calculation uses cash inflows or profits?
topic Choosing between Investments Using a Comparison of NPVs
👀More Complex NPV Comparison: Interrelated Projects
topic NPV of $1 Million for a Project Means What
topic WHEN to Invest? Investing at the Right Moment...
topic Calculating NPV with Missing Data
topic Example of Net Present Calculation
topic NPV of Partial Payments
topic How do you Calculate NPV when Initial Investments are Unknown?
topic Missed Interest in NPV
topic NPV assumes Certainty of Cash Flows
topic Calculating Cost per Unit if Zero NPV without any Operating Costs Information
topic Calculating NPV for a Project
topic NPV Cost Avoidance and Savings
topic NPV for Leased Equipment versus Purchased Equipment
topic NPV with a Missing Cash Flow Figure
🔥 NPV with Only Costs & IRR
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More on Net Present Value (NPV):
Summary
Discussion Topics
topic Re-evaluating an investment decision
topic Operating Cash Flows
topic Does the Net Present Value (NPV) calculation uses cash inflows or profits?
topic Choosing between Investments Using a Comparison of NPVs
👀More Complex NPV Comparison: Interrelated Projects
topic NPV of $1 Million for a Project Means What
topic WHEN to Invest? Investing at the Right Moment...
topic Calculating NPV with Missing Data
topic Example of Net Present Calculation
topic NPV of Partial Payments
topic How do you Calculate NPV when Initial Investments are Unknown?
topic Missed Interest in NPV
topic NPV assumes Certainty of Cash Flows
topic Calculating Cost per Unit if Zero NPV without any Operating Costs Information
topic Calculating NPV for a Project
topic NPV Cost Avoidance and Savings
topic NPV for Leased Equipment versus Purchased Equipment
topic NPV with a Missing Cash Flow Figure
🔥 NPV with Only Costs & IRR
Special Interest Group

SIG Leader

Do you know a lot about Net Present Value (NPV)? Become our SIG Leader

Knowledge Center

Net Present Value (NPV)
Knowledge Center



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