Scribd Logo
Upload

Welcome to Scribd!

  • B) 1. Detroit Has A Higher NPV 2. The Net Cash Flow Is The Same For Both 3

    Uploaded by

    Aryan Madan
    8 views3 pages
    1) Net present value (NPV) calculates the total discounted net cash flow of an investment minus the initial cost. 2) The document provides an example NPV calculation for a project with an initial cost of $850,000 and net cash flows of $240,000, $300,000, $350,000 and $350,000 over four years. 3) The calculated NPV for this project is $706,200, indicating it should be accepted since the NPV is positive.

    Original Description:

    Original Title

    business 18 aug

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    1) Net present value (NPV) calculates the total discounted net cash flow of an investment minus the initial cost. 2) The document provides an example NPV calculation for a project with an initial cost of $850,000 and net cash flows of $240,000, $300,000, $350,000 and $350,000 over four years. 3) The calculated NPV for this project is $706,200, indicating it should be accepted since the NPV is positive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    8 views3 pages

    B) 1. Detroit Has A Higher NPV 2. The Net Cash Flow Is The Same For Both 3

    Uploaded by

    Aryan Madan
    1) Net present value (NPV) calculates the total discounted net cash flow of an investment minus the initial cost. 2) The document provides an example NPV calculation for a project with an initial cost of $850,000 and net cash flows of $240,000, $300,000, $350,000 and $350,000 over four years. 3) The calculated NPV for this project is $706,200, indicating it should be accepted since the NPV is positive.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    b)

    1. Detroit has a higher NPV


    2. The net cash flow is the same for both
    3.
    1) Net present value is a value that calculates the total discounted net cash flow
    minus the initial cost of an investment project.
    2)  
    Year Net Cash Discoun Present
    Flow t Factor Value
    0 (850000)
    1 240000 0.88 211200
    2 300000 0.76 228000
    3 350000 0.67 234500
    4 350000 0.59 206500

    Sum of present value- 211200+228000+234500+206500= 880200


    Sum of net cash flow- 174000
    NPV- 880200-174000= 706200

    You might also like