FM11 30 - with an NPV function. Enter the cash flows...

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c. 1. Define the term net present value (NPV). What is each franchise's NPV? Answer: The net present value (NPV) is simply the sum of the present values of a project's cash flows: NPV = = + n 0 t t t ) r 1 ( CF . Franchise L'S NPV is $18.79: 0 1 2 3 | | | | 10% (100.00) 10 60 80 9.09 49.59 60.11 18.79 = NPV L NPVs are easy to determine using a calculator
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Unformatted text preview: with an NPV function. Enter the cash flows sequentially, with outflows entered as negatives; enter the cost of capital; and then press the NPV button to obtain the project's NPV, $18.78 (note the penny rounding difference). The NPV of franchise S is NPV S = $19.98. Mini Case: 11 - 30...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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