7. PRESENT VALUE Present value is the currant dollar value of a future amount_the amount of money that would have to be invested today at a given interest rate over a specified period to equal the future amount.
19. NPV = sum of the P.V of cash inflow - initial investment
20. Choosing The Capital Investment When resources are Limited: The opportunity cost of capital is 10% and our company has the following opportunity . Cash Flow(RS. Millions) 12 +15 +5 -5 C 16 +20 +5 -5 B 21 +5 +30 -10 A NPV at 10 % C3 C2 C1 Project
22. For our three projects the profitability index is calculated as follows: 2.1 21 10 A 2.4 12 5 C 3.2 16 5 B Profitability index NPV Rs.millions Investment Rs.millions Project
24. PRESENT VALUE Present value is the currant dollar value of a future amount_the amount of money that would have to be invested today at a given interest rate over a specified period to equal the future amount.
39. NPV = sum of the P.V of cash inflow - initial investment
40. Choosing The Capital Investment When resources are Limited: The opportunity cost of capital is 10% and our company has the following opportunity . Cash Flow(RS. Millions) 12 +15 +5 -5 C 16 +20 +5 -5 B 21 +5 +30 -10 A NPV at 10 % C3 C2 C1 Project
42. For our three projects the profitability index is calculated as follows: 2.1 21 10 A 2.4 12 5 C 3.2 16 5 B Profitability index NPV Rs.millions Investment Rs.millions Project
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