How to calculate NPV?
What are the steps to calculate NPV?
- Estimate Cash flows (inflows & outflows).
- Assess riskiness of Cash Flows.
- Determine r = discount rate for the project.
- Find NPV
- Accept if NPV > 0
** Note that cash flow and not profit is used to calculate NPV. When given profit, please calculate cashflow before calculating NPV. Example:
