ASSIGNMENT

Assignment

Assignment

PART 1

See attached excel sheet

PART 2

A method used in the capital budget, which subtracts the present value of cash flows for the present value of cash outflows. NPV is used to analyze the profitability of an investment or project. NPV compares the value of a dollar today versus the value of that same dollar in the future after taking inflation and return into account. If the NPV of a project for the future is positive, then it must be accepted. However, if negative, then the project should probably be rejected by the cash flows are negative.

From the calculated value of NPV, we can say that the project has a positive return that the NPV is positive. The project would result in increasing the profitability of the company according to the results of NPV. Net Present Value (NPV) is the first discounted cash flow (NPV) technique covered here. It is based on the concept of opportunity cost of assigning a value to the cash inflows from equity investments.

Remember that the opportunity cost is the calculation of what is sacrificed or foregone as a result of a particular decision. Also known as the "true" cost of taking action. We see the concept as the present value cash equivalent of a loan now totals at a later date. So how does the opportunity cost in revenue, we can wait for later? Well, imagine what a company can do now with the cash amounts that should wait a while to receive.

In fact, if you receive cash that is likely to save it and put it in the bank. So a company that sacrifices have to wait for the cash inflows is the lost interest on the amount that would have been saved.

Put another way, business is likely to have borrowed the capital to invest ...