ECR - Net Present Value

emma123

Hi everyone

Been searching on the forum for over an hour trying to find help for this question but can't find anything and i'm starting to panic now

Basically the question asks you to calculate the NPV of a project at the cost of capital of 15%.

From my understanding, you multiply the cash flow each year by the discount factor of 15% to give you the discounted cash flow? Is this right?

The only thing is though in all the examples in the textbook, it provides you with the cash flow for each year yet in my practice question, the only information I am given seems to only be for 5 years, whereas there are 6 years of cost of capital. So my problem is how do I calculate the cash flow for years 1 - 6?

Is any of this making any sense?

I hope someone can shed some light on this for me cos it's completely baffling me

Rinske

Hi Emma,

Are any of these posts of any use to you?

http://forums.aat.org.uk/showthread.php?t=16413

http://forums.aat.org.uk/showthread.php?p=200056#post200056

http://forums.aat.org.uk/showthread.php?t=24895&highlight=discounted+cash+flow

http://forums.aat.org.uk/showthread.php?t=22372&highlight=discounted+cash+flow

emma123

Thanks Rinske I appreciate it

Had a quick glance at the links they look good so I'll have a proper look at them 2moro. Too tired to study now

Ps I see the links are all from the technician forums? I didn't realise costing was part of level 4 as well