Net present value method - dcf technique, Finance Basics

Assignment Help:

Net Present Value Method - DCF Technique

The method discounts outflows and inflows and ascertains the total present value via deducting discounted outflows from discounted inflows to get net present cash inflows such is the present value method will include selection of rate acceptable to the management or equivalent with the cost of finance and this will be utilized to discount outflows and inflows and net present value will be equivalent to the present value of inflow minus present value of outflow. If NPV is negative you do not invest, if net present value is positive you invest.

Pv(inflow) - Pv(outflows) = NPV

Note 

Initial outflow is at time zero and their value is their real present value.  By this method, an investor can ascertain the viability of an investment with discounting outflows.  During this case, a venture will be viable whether it has the lowest outflows.

NPV = [A1 / (1+K)1 + A2 / (1+K)2 + A3 / (1+K)3 + .... AN / (1+K)N] - C

Whereas:    A = annual inflow

                    K = Cost of finance

                    C = Cost of investment

                    N = Number of years


Related Discussions:- Net present value method - dcf technique

Please help!!, The following information pertains to Fairways Driving Range...

The following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they will

Accounts receviable , sir could you please tel me what is A/R process.

sir could you please tel me what is A/R process.

Financial markets, term paper about financial markets in pakistan

term paper about financial markets in pakistan

Roa - return on assets, ROA - Return on Assets The Average of the ...

ROA - Return on Assets The Average of the industry ROA was 10.02% for 2004, 6.81% for 2005, and 7.32% for 2006. The chart showed that Lenovo had a little bit higher ROA th

Price earnings ratio valuation, Price Earnings Ratio Valuation P/E rat...

Price Earnings Ratio Valuation P/E ratio is traditionally employed for valuation of shares however it is an important ratio in the valuation of business. The P/E ratio is the

Cost of retaining finance, Cost of Retaining Finance This will contain...

Cost of Retaining Finance This will contains dividends for share capital and interest for debt finance or can say tax deducted or like effective cost of debt.  Though, when co

What is the process of investing in securities, What is the Process of Inve...

What is the Process of Investing in Securities ? There are several process of investing in securities:- (1) Finding a Broker (2) Selection of Brokers (3) Opening an Account w

Important points for capital market authority, Important Points for Capital...

Important Points for Capital Market Authority Apart from the above roles, CMA can assume the given steps to encourage progress of stock exchanges in US or other countries.

Finance.., the nominal fee interest rate in your account is 7% your semi-an...

the nominal fee interest rate in your account is 7% your semi-annually rate of interest APY will be?

Write Your Message!

Captcha
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!

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