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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Hathaway March 2020
Hello sir,
For the part a ii and iii) of this question, when calculating NPV, why do we need to deduct the $10.72 from the expected Npv calculation?
I thought that we had to add the 10.72 (pv of year 1) to the NPV of years 2 to 5..
Can you please explain sir?
10.72 is the PV of the initial investment and is therefore negative and is subtracted from the PV of the later inflows.
