More Complex NPV Comparison: Interrelated Projects

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?

  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).

 

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👀More Complex NPV Comparison: Interrelated Projects
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