- This topic has 1 reply, 2 voices, and was last updated 13 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
I am confused that why the interest is not included in the NPV calculation in PQ1?
Could you please explain? Thanks!!
The reason is that the whole purpose of discounting is to account for the cost of capital (which includes the interest on any borrowing).
To deduct interest in arriving at the cash flows would be accounting for it twice.
You never show interest in the cash flows when calculating an NPV.
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.