## CHECK THESE SAMPLES OF Calculating cash flow and net present value (see paper for details)

...2057.1936
4 (sale of building) 1300 1 21613.746
Less initial **cash** outlay (I0) (6000)
[300 + 1900 + 2000 + 18000
**Net** **Present** **Value** 16913.746
NPV of the project = 13.746 X 1000 = 16,913.746
**CALCULATIONS** EXPLAINED
1. To get the **present** **value** of future **cash** **flows**, we discount them using a suitable discounting rate. In this case it has been given as 9%. The annuity tables give a factor within a certain interest rate .This factor is then multiplied by the **cash** **flows** to obtain their **present** **values**. It is...

6 Pages(1500 words)Essay

...PART A **Net** **Present** **value** 2. Pay Back period 3. Internal rate of Return In the NPV **calculation** above the rate of interest used is 20% whereby the NPV of **cash** **flows** is -1940. At IRR rate NPV has to be zero. So using interest rate of 21% NPV is **calculated** again as under
4. Appraisal on selling price lowered by 3 pence
5. Appraisal when sale volume greater by 10%
Please note that operational cost being fixed will not change with change sale volume.
6) Year sales in units = 52000 units
Assuming contribution is 20%
Sales = (30400/20) * 100 = 152000
Then Sales per unit = ((30400/20) * 100) / 52000 = £2.92 per unit...

5 Pages(1250 words)Essay

...= 160,000
**Net** **cash** **flow** = 160,000 + 330,000 = 490,000
a) Depreciation is a non-**cash** charge and as such has no impact on the **cash** **flow** by itself. However, the **net** income for the year is **calculated** by charging depreciation along with other **cash** expenses, and this figure of **net** income is used for **calculating** income tax liability. If the depreciation for the second year becomes zero, the **net** income for tax purposes goes up correspondingly, resulting in higher tax payment and lower **cash** **flow**.
2....

2 Pages(500 words)Coursework

...Exercise The **Net** **Present** **Value** (NPV) Model a) Year **Cash** **flow** PVIF 10%, n **Present** **value** -50,000 50,000 12,000 0.909 10,908 16,000 0.826
13,216
2014
20,000
0.751
15,020
2015
24,000
0.683
16,392
2016
28,000
0.621
17,388
NPV
22,924
i) This is a worthwhile investment to venture into since it results in a positive NPV. Therefore, the **present** **value** of the **cash** **flows** expected is more than the **present** **value** of the initial **cash** outlay incurred at the beginning.
ii) Due to time **value** of money, the **value** of money now would be much less in one year since money loses **value** as time passes. This means that it is prudent for an investor to consider the **present** **value** of the expected **net** returns and compare this with the **present** **value** of the initial... ...

6 Pages(1500 words)Assignment

...Question The three main capital budgeting techniques are payback period, **net** **present** **value** (NPV) and internal rate of return (IRR). The payback period **calculates** the number of years that it takes a company to recover its original investment. An advantage of this method is that it is simple to **calculate**. A con of the payback period is that it does not take into consideration the time **value** of money. The **net** **present** **value** **calculates** the **present** **value** of future **cash** **flows** of a project. A project is accepted...

1 Pages(250 words)Coursework

...as follows:
S = (£11,000 + 4*£13,000 + £10,000)/6
S = (£11,000 + £52,000 + £10,000)/6
S= £73,000/6
S = £12,166.67
i.e. £12,167 per unit
The information arrived at from the computations suggests that the expected annual demand is 6,333 units and the expected selling price per unit - £12,167. These figures can be used to determine which option is better for Steelbeam PLC. Each option will be assessed to determine its feasibility.
**Net** **Present** **Value**
NPV is the preferred approach to project appraisal (Ryan and Ryan 2002). This approach focuses on the time **value** of money and so the **net** **cash** **flows** from the project are...

10 Pages(2500 words)Essay

...**Cash** conversion cycle **Cash** conversion cycle **Cash** conversion cycle is the total number of days that a company needs to convert its resources into **cash** **flows**. It **calculates** the period of time during which every dollar input is devoted to the process of sales and production prior to its conversion to **cash** via the process of receivable accounts. The primary purpose of the process of **cash** conversion is to provide insight into the company’s financial stability because it indicates the period of time during which assets are committed to business (Brigham & Ehrhardt, 2008). Therefore, the **cash** is...

1 Pages(250 words)Essay

...too as NPV which is useful because it helps corporations determine which project to choose from when there are various alternatives. The **net** **present** **value** technique uses discounted yearly **cash** **flows** from projects to evaluate whether a project should be accepted or rejected (Besley, Brigham, 2000). The NPV method can be used to evaluate one project or various projects. When evaluating a single project the manager should accept the project if its **net** **present** **value** is above cero. Projects with negative **net** **present** **value** should be rejected. In the case when...

1 Pages(250 words)Essay

... **Net** **Present** **Value** Learner’s Affiliated institute **Net** **Present** **Value** Initial investment 600,000 Duration = 5 years Rate = 10%
**Cash** **flow**:
Year 1: $380,000
Year 2: $390,000
Year 3: $400,000
Year 4: $410,000
Year 5: $420,000
**Net** **Present** **Value**: -$1,598,490.88
PV of Expected **Cash** **Flows**: $1,509.12
Discussion
At a rate of 10.00% and for a period of 5 years, the projected **cash** **flows** are worth $1,509.12 today, which is less than the initial $1,600,000.00. The NPV of the project is -$1,598,490.88, which implies that, the project is not likely to receive the expected return at the end of the project. For this reason, pursuing this project may not be an optimal decision.
However, despite the fact that, the projected capital project resulted... ...

1 Pages(250 words)Coursework

...Finance and Accounting Method of **Calculating** the **Net** **Cash** Provided By Operating Activities Both the selected companies i.e. Ford Motor Company and General Motors are found to be using the indirect method for **calculating** **net** **cash** being generated from their respective operating activities. Justifiably, it has been evident from the proforma of the **cash** **flow** statement that both the companies considered **net** income, instead of sales and revenue, to be the main element for determining the **cash** amount generating particularly from the operating actions, which related to the above...

3 Pages(750 words)Essay