Defn

Decision Rule :

If the NPV of the project,discounted at cost of cap

0
Year
CF 1
2
3
4
5
Residual Value-yr 5
 NPV

The NPV of a project is the

sum of all PVs of all cash
flows that arise as a result of
doing the project

V of the project,discounted at cost of capital, is positive then accept the project, Else reject the project

A PV
$ 000 $ 000
-100 -100

50 45
40 33
30 23
25 17
25 16
5

NPV 134