Operating Cash Flows

Net Present Value (NPV)
Knowledge Center

 

Next Topic

Net Present Value (NPV) > Forum > Operating Cash Flows

Operating Cash Flows
Joyce, Student (MBA), United States, Member
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 Cashflows
Mukela Namushi Mubano, Accountant, Zambia, Member
12,000 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 Factor
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
How did you calculate the discount factor of 4.968?
 

 
Calculating Discount Factor
Mark May, Student (University), United States, Member
The 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 Factor
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
Right, finding the present value. Pv = fvn/(1+1)n
Thanks for the clarification.
 

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

     
Special Interest Group Leader

Interested? Sign up for free.


Net Present Value (NPV)
Summary
Forum
Best Practices


    Net Present Value (NPV)
    Knowledge Center

     

    Next Topic



    About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
    2019 12manage - The Executive Fast Track. V15.1 - Last updated: 19-8-2019. All names of their owners.