Corporate Finance

rishabhhurkat
Good Student
Posts: 24
Joined: Wed Dec 09, 2015 9:29 am

Corporate Finance

Postby rishabhhurkat » Fri Mar 18, 2016 12:22 pm

Please find the attachement

How come NPV is Calculated here.....
Attachments
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nehad
Posts: 3
Joined: Mon Mar 07, 2016 6:02 am

Re: Corporate Finance

Postby nehad » Sat Mar 19, 2016 2:29 pm

Hi Rishabh

As we know that NPV= present value of cash inflows-present value of cash outflows
and in this expression we have Net cash flow is given and the calculation is given in the answer, so as per the calculation. NPV is higher.
NPV= 909+1652+1503+1366+(-5000)
=5430-5000
=$430

rishabhhurkat
Good Student
Posts: 24
Joined: Wed Dec 09, 2015 9:29 am

Re: Corporate Finance

Postby rishabhhurkat » Sat Mar 19, 2016 7:20 pm

Hi Nehad

My The Essence of my Question is How CFs are Discounted at an Assumed Rate of 10%??

rishabhhurkat
Good Student
Posts: 24
Joined: Wed Dec 09, 2015 9:29 am

Re: Corporate Finance

Postby rishabhhurkat » Sun Mar 20, 2016 4:58 am

Thank you...

But the Real Question was how the Discounted CFs are calculated as No Rate is Given in Question??

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: Corporate Finance

Postby edupristine » Mon Mar 21, 2016 5:18 am

Hi Rishabh & Nehad

If there is no discounted rate is given then you can assume it 10%.


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