NPV ANALYSIS

NPV Scenario Analysis

NPV Scenario Analysis

Solution

Net present value (NPV) is the present value of inflows minus the outflows. As it is based on estimates regarding future cash flows, it accounts for time value of money. An NPV estimate is only accurate as its components mentioned above. Hence a project whose cash flow components such as revenue and operating expense can be estimated easily and reliably, that will have the most accurate NPV estimate (Spann, 2008).

A brand new retail setup

Lets identify different components of NPV which are used in its calculation and then we would be in a better position to answer ...