Unformatted text preview: Average amount invested in asset = book value of asset halfway through its useful life Book value halfway through useful life: Asset with no residual value = ½ of asset cost Asset with residual value = (cost + residual) / 2 Net Present Value NPV = PV of net cash inflows – PV of investment Profitability index = PV of net cash inflows / PV of investment IRR Interest rate at which PV of net cash inflows = PV of investment...
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 Spring '08
 Kang
 Accounting, Managerial Accounting, Net Present Value, net cash inflows, annual operating income

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