net present value

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September 17, 2022 at 1:44 pm #666607
trisha20
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if a mistake in estimating the NPV of a project is made. where the net
income is discounted rather than the cash flows to the project. Would you expect the NPV that you
have calculated to be higher or lower than the NPV using cash flows? why is there a difference
September 17, 2022 at 3:29 pm #666617
John Moffat
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The net income is the profit which is after charging depreciation. The NPV is therefore likely to be lower than that had they used the cash flows.
Why are you asking me this? It is not the sort of thing that is asked in the AFM exam.
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