one of the advantages of NPV over other methods such as ARR & Payback is that considers the entire life of the Project and considers cash flow instead of profit.
My question is: if a scenario give you a period of 5 years to calculate NPV with estimated cash inflow and outflow
what happens after year 5?- Does that mean that after the 5 years the project seizes to exist??
is the 5 years the whole life of the project??
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NPV
10y ago#1Yes - if you have no data for years 6 etc, you can't invent it.
All NPV calculations make an assumption about when the project ends. Sometimes scrap sales come in then too.
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