Net Present Value

# Net Present Value - Investment Decision Payback Criterion...

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Unformatted text preview: Investment Decision Payback Criterion \$480K Year 1 2 3 4 3 4 \$51K \$69K \$480K \$94K \$163K \$643K \$43K \$43K CF Sum \$51K \$69K Catch Up < \$325K < \$325K < \$325K > \$325K \$43K 0 Years 2 1 -\$325K 15% Required Return \$325K - \$163K = \$162K \$162K / \$480K ≈ 0.34 3 + 0.34 = 3.34 years Is 3.34 years acceptable? Entering Cash Flows 2nd CLR Work Enter ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ Enter Enter Enter Enter IRR 21.91% IRR CPT CF Internal Rate of Return R IR -\$325K > 15% ✔ Net Present Value \$43K \$51K NP V NPV Enter CPT 15 ↓ \$69K NPV \$70,764.81 \$480K > \$0 ✔ ...
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## This note was uploaded on 04/05/2011 for the course FIN 350 taught by Professor Debruinne during the Winter '11 term at Grand Valley State University.

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