Question

how the net present value used to analysis investment projects ?

how the net present value used to analysis investment projects ?
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer:

Net present value is used in Capital budgeting to analyze the profitability of a project or investment. It is calculated by taking the difference between the present value of cash inflows and present value of cash outflows over a period of time.

The formula for NPV varies depending on the number and consistency of future cash flows. If there’s one cash flow from a project that will be paid one year from now, the calculation for the net present value is as follows:

NPV _ Cash flow - – initial investment (1+i) where: i = Required return or discount rate t= Number of time periods If analyzi

Add a comment
Know the answer?
Add Answer to:
how the net present value used to analysis investment projects ?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • ​​​​​​​Net Present Value and Other Investment Rules Describe how net present value is used in the...

    ​​​​​​​Net Present Value and Other Investment Rules Describe how net present value is used in the financial decision-making process. Explain the disadvantages of using the payback method. Compare and contrast the internal rate of return (IRR) method from the net present value method (NPV).

  • Explain how a net present value (NPV) profile is used to compare projects. How does this...

    Explain how a net present value (NPV) profile is used to compare projects. How does this compare to internal rate of return (IRR)? How does reinvestment affect NPV and IRR?

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $53,200 $167,000 $267,000 53,200 167,000 225,000 $112,000 85,000 43,000 19,000 53,200 167,000 159,000 53,200 167,000 109,000 53,200 167,000 7,000 75,000 Total $266,000 $835,000...

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $52,200 $161,000 $110,000 $258,000 2 52,200 161,000 84,000 217,000 3 52,200 161,000 42,000 153,000 4 52,200 161,000 18,000 105,000 5 52,200 161,000...

  • TEXT VERSION: Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment...

    TEXT VERSION: Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $47,500 $152,000 $100,000 $243,000 2 47,500 152,000 76,000 205,000 3 47,500 152,000 38,000 144,000 4 47,500 152,000 17,000 99,000 5...

  • There are four principal decision models for evaluating and selecting investment projects . Net present value...

    There are four principal decision models for evaluating and selecting investment projects . Net present value (NPV) Profitability index (PI) . Internal rate of return (IRR) Payback period (PB) Which method recognizes the real option aspects of a proposed capital investment? O IRR and PI O None of the methods (NPV, IRR, PI, PB, or discounted PB) recognizes the real dation aspects of a capital O NPV, IRR, PI, and discounted PB investment Read the following statements and categorize whether...

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $51,000 $161,000 $107,000 $258,000 2 51,000 161,000 82,000 217,000 3 51,000 161,000 41,000 153,000 4 51,000 161,000 18,000 105,000 5 51,000 161,000...

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow $40,000 40,000 40,000 40,000 40,000 $200,000 $128,000 128,000 128,000 128,000 128,000 $640,000 $84,000 64,000 32,000 14,000 6,000 $200,000 $205,000 173,000 122,000 83,000 57,000...

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $40,000 $130,000 $84,000 $208,000 2 40,000 130,000 64,000 176,000 3 40,000 130,000 32,000 124,000 4 40,000 130,000 14,000 85,000 5 40,000 130,000...

  • Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of...

    Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income from Operations Net Cash Flow Income from Operations Net Cash Flow 1 $46,000 $139,000 $97,000 $222,000 2 46,000 139,000 74,000 188,000 3 46,000 139,000 37,000 132,000 4 46,000 139,000 16,000 90,000 5 46,000 139,000...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT