User Account

All Pages

Explain the meaning of NPV and its advantages

Assignment Help Accounting Basics
Reference no: EM132579059

Question - A firm is considering investing in a project that requires an initial investment of $200,000 and is expected to produce cash inflows of $60,000, $80,000, and $100,000 in first, second, and third years. There will be no residual value.

The firm applies a discount rate of 10%.

Discount factors for Year 1, 2 and 3 are 0.909, 0.826, and 0.751 respectively.

Required -

i) Calculate the NPV of the project.

ii) Explain the meaning of NPV and its advantages as an investment evaluation method compared with the Accounting Rate of Return and Payback methods.

Reference no: EM132579059

Questions Cloud

Find what is the value of the cost of goods sold : Carriage outwards £2,230, Carriage inwards £990, Opening inventory £7,500, and closing inventory £8,130. what is the value of the cost of goods sold
Prepare depreciation schedules for units-of-activity methods : DuPage Company purchases a factory machine at a cost of $18,000 on January 1, 2010. Prepare depreciation schedules for units-of-activity methods
What will be the carrying value of the equipment : It is being depreciated using the reducing balance method by 50% annually. What will be the carrying value (NBV) of the equipment on 31 December 2019?
Paper on poetry parameters : Paper - Poetry Parameters - Choose up to 3 poems and / or song lyrics - Do a formalist analysis on the subject you have chosen
Explain the meaning of NPV and its advantages : Explain the meaning of NPV and its advantages as an investment evaluation method compared with the Accounting Rate of Return and Payback methods
Describe current and proposed retention plans : Assess any existing advancement barriers, and then explain how you plan to overcome them. Describe current and proposed retention plans.
What is the primary measure used for asset valuation : What is the primary measure used for asset valuation on the statement of financial position? What is the source of this measure and justification for its use
What the correct way to record the transaction would be : Hilda makes a Cash sale of £4,500 goods to Customer XYYZ the correct way to record this transaction would be?Credit Sales and Debit Bank
Explain why on-boarding process needs to be created : Explain why an on-boarding process needs to be created. Then create an outline of an on-boarding process.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd