56

.docx
School
University of the People **We aren't endorsed by this school
Course
BUS 4404
Subject
Finance
Date
Nov 4, 2023
Pages
2
Uploaded by BailiffIce11081 on coursehero.com
Using your own words (do not cut and paste an example from another source) please state and explain the computational steps of a Net Present Value (NPV) calculation. To calculate the computational steps of a Net Present Value (NPV), is easy, you just need to follow 4 steps. Before I provide those steps, let me explain what NPV is. NPV is net present value, which is a metric of a finance unit, used to look at the profitability of an investment, by looking and comparing the present value provided of the cash inflows to the outflows that happen over time. The steps to calculate this are; Estimate future cash flows, choose a discount rate, calculate the present value and then add the present value to get the sum present values. What information does NPV provide a management team of a business and what kind of decision is made by management when it considers a project's NPV? Please see the below reference. " A positive NPV suggests that the investment is profitable, i.e. the return exceeds the predefined discount rate. The NPV is negative if expenses are higher or occur earlier than the returns. A net present value of 0 indicates that the investment earns a return that equals the discount rate. Management teams of businesses use NPV to determine the profitability of a project or investment and to compare it with other projects." (Sebastian. (2019, December 19). What is the Net present value (NPV) & how is it calculated? - Project-Management.info. Project- Management.info. https://project-management.info/net-present-value-npv/ .)
References: (BUS 4404-01-AY2024-T1, Discussion post unit 3, BUS 4404-01 - AY2024-T1: UNIT 3 (uopeople.edu).) (computational steps of a Net Present Value (NPV) calculation. - Bing. (n.d.). Bing. https://www.bing.com/search? pglt=41&q=computational+steps+of+a+Net+Present+Value+(NPV) +calculation.&cvid=20af8cfe60e442f3af66cbb4ee63b652&gs_lcrp=EgZjaHJvb WUyBggAEEUYOdIBBzI5MGowajGoAgCwAgA&FORM=ANNTA1&PC=NMTS .) (Sebastian. (2019, December 19). What is the Net present value (NPV) & how is it calculated? - Project-Management.info. Project- Management.info. https://project-management.info/net-present-value-npv/ .)
Page1of 2
Uploaded by BailiffIce11081 on coursehero.com