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Can you please indicate to me ,how the initial capital treatment should be accounted for in a NPV question. Should it deducted in the first year or the last year of investment?
its not deducted then, you put it at yr 0 and its calculated against the pv of the life of the investment. maybe you are thinking of working capital which maybe stated that full amount be realised in the last yr of investment. but investment is always at yr zero.
I think the treatment of capital investments and working capital are similar. They are both deducted at the present time (time 0). If there is any resale value of the capital investment it can be added on at the end. Similarly, working capital can also be added on at the end, as it is no longer needed.
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