Combined NPV

[匿名]

2015-01-20 2:40 am

1. If the NPV of project A is +240, project B is -80 and project C is +80. What is the NPV of the combined project?

2. NPV, Paybck period and IRR, which one may not use all possible cash flows in its calcutions?

3. why investment in net working capital is not depreciated?

回答 (1)

Edward Y

2015-01-23 5:28 pm

✔ 最佳答案

1. The combined NPV = [+240] + [-80] + [-80] = +240.
Since all the values of the 3 projects are present value, meaning the value at period zero, so they can just be added together as the value for the combined project.

2. Payback period calculation may not use all possible cash flows in its calculations because it will only require to pick up enough cash inflows to equal the total cash outflow, and will not pick up any cash flow beyond the payback period. For NPV and IRR, all cash inflow and outflow are included in the calculation.

3. Net working capital (current asset - current liability) is not depreciated because the value is already at the current accounting period, so no portion of it has to be depreciated.

參考: My past Learning.

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