If the stream of cost and returns for hypothetical investment project are assume to be as under cost are assume to be Rs.200 for each of the first three years and the returns from the project begin only after the third year and it continue forever at Rs.100 per year and find the NVP and also comment on it?
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Net present value (NPV) is a core component of corporate budgeting. It is a comprehensive way to calculate whether a proposed project will be financially viable or not. The calculation of NPV encompasses many financial topics in one formula: cash flows, the time value of money, the discount rate over the duration of the project (usually WACC), terminal value and salvage value.
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