Construct the first cash flow

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Reference no: EM13705285

Net Present Value analysis of proposed strategy's new cash flow and EPS/EBIT analysis

NOTE: To construct the first cash flow (cf1) at the very minimum, the new revenue from your strategy(s) must be discounted back to the present value by calculating EBIT and that figure will be your cf_n for each year. cf₀ (initial cost of your strategy), cf₁ (discounted cash flow first year), r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).

a. NPV = -cf₀ + cf₁/(1+r)¹ + cf₂/(1+r)² + cf₃/(1 + r)³......cf_n/(1+r)ⁿ

Reference no: EM13705285

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