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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? (...) Read more? Sign up for free
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Mukela Namushi Mubano Accountant, Zambia


Operating Cashflows
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.



KATHRYN STEINER, MBA Entrepreneur, United States


NPV  Question on Calculating Discount Factor
How did you calculate the discount factor of 4.968?



Mark May Student (University), United States


Calculating Discount Factor
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.



KATHRYN STEINER, MBA Entrepreneur, United States


Caculating Discount Factor
Right, finding the present value. Pv = fvn/(1+1)n
Thanks for the clarification.



Management Fan Analyst, Philippines


NPV for Capital Budgeting
The IRR is 16% which is higher than the discount factor use  12%. In addition your payback period is around 4.35 year.

