
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.




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.



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