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net present value

Aamandeep9y ago
hi sir how to calculate the net preent value of the 10% pa with cash inflows of £500 per year for ten years and cash out flow of £300 every year. so first we have to calclate the discounte factor of £500 for ten years using annuity table and then reduce this £300 cash outflows from total of NPV OR IT should be reduced and den applied annuity factor ??1 years cash inflows discount factor cash outflows 1 500 500*.909= 454.50 454.50-300=154.50 2 500 500*.826=413 413-300= 113 3 500 500* 0.751= 375.50 375.50-300= 75.50 4 500 500* 0.683=341.50 341.50-300=41.50 5 500 500* .621=310.50 310.50-300= 10.50 6 500 500*.564= 282 282-300= -18 7 500 500* .513 =256.50 256.50-300=-43.5 8 500 500*.467=233.50 233.50-300=-66.50 9 500 500*.424=212 212-300=-88 10 500 500*.386=193 193-300=-107 NPV= 72 IS IT WRITE WAY IF NOT SIR CAN U EXPLAIN... Thanks
John MoffatJohn MoffatTutor9y ago#1
The net cash inflow is 500 - 300 = 200 per year for 10 years. The 10 year annuity discount factor at 10% is 6.145 So the PV of the flows is 200 x 6.145 = 1229 You have not written what the original cost is and so it is not possible to calculate the NPV. You really should watch the free lectures on this!