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

Australi a, i ordered case study 1 susam and malcom. when i open the docume...

i ordered case study 1 susam and malcom. when i open the document is completely different, not the same case study an is only relivent in the usa not australia... do you have the c

Hull-white model, Hull-White model As an extension of the Vasicek model...

Hull-White model As an extension of the Vasicek model, Hull-White model (1990) assumed that the short interest rate process follows the mean-reverting stochastic differential e

Assets, thew amount of money investedin a retirement fund is an example of

thew amount of money investedin a retirement fund is an example of

Existence of quantity discounts, Existence of Quantity Discounts Recur...

Existence of Quantity Discounts Recurrently, the firm is capable to take benefits of quantity discounts.  Since these discounts affect the price per unit, they influence also

Capital structure ratio, Capital Structure Ratio Gearing/Leverage/Capi...

Capital Structure Ratio Gearing/Leverage/Capital Structure Ratio The ratio signifies the extent whether the firm has borrowed fixed charge capital to finance the

Assignment, according to given specialization take down an industry and in...

according to given specialization take down an industry and investigate its managerial hierarchy to describe each of one of the managerial work level functioning

Accounting, The Morris Corporation has $ 600,000 of debt outstanding, and i...

The Morris Corporation has $ 600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris’s annual sales are $# million, its average tax rate is 40% and its net

What are the advantages of placement, What are the Advantages of placement ...

What are the Advantages of placement Placement has the below benefits: (i) Timing of issue is significant for successful floatation of shares. In a depressed market cond

Motgage Broker Assgnment, ollowing a personal introduction, and before you ...

ollowing a personal introduction, and before you begin gathering information about the clients’ existing financial situation or needs, there are certain disclosures you are require

Definition of stock exchange, Definition of Stock Exchange According to...

Definition of Stock Exchange According to Pyle: "Stock Exchange are market places where securities which have been listed thereon, may be bought and sold for either investme

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