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If I know current market value, new product cost, service life, operating savings, year of overhaul and salvage value. Assume straight line deprecation and no taxes. How do I do NPV analysis?

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If I know current market value, new product cost, service life, operating savings, year of overhaul and salvage value. Assume straight line deprecation and no taxes.

Please explain how to do a NPV analysis.

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Solution Summary

Discussion is two paragraphs (some thoughts in bullet format) about how to do a NPV analysis.

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NPV is defined as the difference between an investment's market value and its cost. It is only a good investment if it makes money for the company so a positive NPV will be needed. Following steps have to be followed:
? Cash flows of the investment project should be forecasted based on realistic assumptions.
? Appropriate discount rate should be identified to discount the forecasted cash flows. The appropriate discount rate is the project's ...

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