[Sands600461]

How do I calculate the NPV of a company project

[ROLCAM]

You calculate the NET PRESENT VALUE
by matching the outflow at the beginning with all the returns discounted to the present.
An interest rate has to be assumed.

Example:-

Purchase of Equipment = 20,000

Returns over the next five years.

Year 1 5,000
Year 2 5,000
Year 3 5,000
Year 4 5,000
Year 5 5,000

You calculate the present value of the above
5 lots of 5,000, say at 10% Cost of Capital.

You total the 5 calculations and subtract the
original 20,000.

This is a technique in Capital Budgeting decisions as to the choice of alternative
capital investments.