The Net Present Value profiles for each project. Introduction: The difference between the present value of cash inflows and the present value of cash outflows for a particular time is known as the Net Present value. N P V = CF 1 ( 1 + r ) 1 + CF 2 ( 1 + r ) 2 + CF 3 ( 1 + r ) 3 + CF 4 ( 1 + r ) 4 − I 0 Internal Rate of Return is a measure used in the capital budgeting which estimates the profitability of possible investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero. NPV profile is a graphical depiction of the NPV of a project at different discount rates.

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Chapter 10, Problem 10.5WUE

Summary Introduction

To determine: The Net Present Value profiles for each project.

Introduction:

The difference between the present value of cash inflows and the present value of cash outflows for a particular time is known as the Net Present value.

NPV=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CF4(1+r)4−I0

Internal Rate of Return is a measure used in the capital budgeting which estimates the profitability of possible investments. IRR is computed as a discount rate, which makes the net present value of all cash flows from an investment as zero. NPV profile is a graphical depiction of the NPV of a project at different discount rates.

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