If PV of investment is Rs. 1,00,000 & PV of cashinflow is Rs.1,10,000 then NPV would be
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153 นนนนน
אדוננו.
13
ID: 2052000538, NOTE: SCREENSHOT PROHIBITED
INH
With
A
ID: 2052000538
11
Rs. 10,000
O
B
ID: 2052000538
2
Rs. 2, 10,000
O
C
ID: 2052000538
Rs.-10,000
-
D
ID: 2052000538
Rs.-2.10,000
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NPV or Net present value is used for making investment decisions.
The formula for the same is
Net Present Value = Cash Inflow of present value – Total net investment
or
Net Present Value = Cash inflow of present value – Cash outflow of present value
- the NPV provides a clear sign to the company by telling the amount of value they can add up to shortly.
shortly.Present value of Cash inflow = Rs. 1,10,000
shortly.Present value of Cash inflow = Rs. 1,10,000Present value of cash outflow= Rs. 1,00,000
shortly.Present value of Cash inflow = Rs. 1,10,000Present value of cash outflow= Rs. 1,00,000NPV = 1,10,000 - 1,00,000
shortly.Present value of Cash inflow = Rs. 1,10,000Present value of cash outflow= Rs. 1,00,000NPV = 1,10,000 - 1,00,000 = Rs. 10,000
The decision can be made as:
- If NPV is greater than 0 accept it, if it is less than 0 then reject the proposal.
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