Additional Revenue and Incremental costs:

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June 22, 2016 at 8:39 am #323790
tahuran
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In the revision mock exam, there were 2 or 3 questions on calculating NPV and the question had Additional Revenue per year and Incremental Costs per year. How do I deal with this in calculating NPV?
June 22, 2016 at 5:01 pm #323822
John Moffat
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We always calculate the NPV on the future, incremental, cash flows.

So we calculate the net extra cash flow each year – any extra revenue less any extra costs.

Then we discount as I explain in my lectures.
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