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NPV, IRR, and Sensitivity Analysis
cash flow
Year Cash flow ;+NPV ;-NPV ;+NPV ;-NPV ;+NPV ;-NPV
0 -$42,000 2% 3% 1.00 1.00 -$42,000 -$42,000
1..10 $4,700 2% 3% 8.98 8.53 $42,218 $40,092
NPV $218 -$1,908
IRR 2.10%
10% Decrease
Discount
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Expected NPV and standard deviation of NPV with real example
What are the project's expected NPV and standard deviation of NPV?
b. Should the base case analysis use the most likely NPV or expected NPV? Explain your answer. a.
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NPV
126133 NPV You have estimated 3 possible NPV outcomes for an investment under analysis, the expected NPV, the best case NPV and the worst case NPV. You have also gotten estimates from management on the probability of each of these three cases.
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Coefficeint of variation of NPV
(Expected NPV and standard deviation of NPV in thousands). The expected NPV, standard deviation of NPV, and coefficeint of variation of NPV is calculated when a probability distribution of NPV is given.
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NPV, IRR and Profitability Index
NPV=0.
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Calculating NPV at Various Discount Rates
What is the NPV at a discount rate of 11 percent?
What is the NPV at a discount rate of 21 percent?
What is the NPV at a discount rate of 29 percent?
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NET PRESENT VALUE and internal rate of return FOR CAPITAL
You can get the NPV for 0%.
4% NPV would be $46,822.37
8% NPV would be -$7,831.63
10% NPV would be -$32,419.23
NPV is calculated by finding the present value of each cash flow, including both cash inflows and outflows, discounted
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NPV analysis of Jameson Cargile, Inc.
NPV is just for analysis.
B. The YellowJacket is a better choice because the negative NPV is greater than the negative NPV associated with the Bumblebee.
C.
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Internal rate of return
the discount rate that makes NPV negative.
the rate of return that makes the NPV positive.
One disadvantage of the NPV method is that:
Answer
the NPV deals with cash flows.
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Calculating Net Present Value
PI= (I+NPV) / I where I=Investment
if PI>0 then {(I+NPV) / I}>0 which means NPV> -I meaning NPV>0 where <0>
is the limit of I
NPV=0={C1 / (1+IRR)}-I={C1 / (1+k)}-I where C1 is the expected future net
cash flow
that means IRR=K
As stated from