Accounting and quantative Analysis
Accounting and Quantitative Analysis Report
Project Appraisal- Net Present Value and Internal Rate of Return
Driss Fares-Introduction
In this report, I aim to present a thorough outline of a method of project appraisal: Net Present Value (NPV). This is a dynamic investment appraisal that utilizes a discounted cash flow method. Along with the IRR (internal Rate of Return), the NPV method is regarded as more comprehensive than the simpler, more traditional Payback method. It withal considers the time value for money principle. I will compare it to a simpler method of project appraisal: the Payback method. This is a much simpler method, conventionally used by diminutively minuscule businesses. I will consider the strengths and impuissance 's of both methods, and what implicative insinuations these have when choosing which method to utilize. Lastly, I will provide a demonstration of the NPV method utilizing Microsoft Excel.
-NPV method of Project Appraisal
NPV, or net present value, is a method of project appraisal. It compares the initial cost of the project, with prognosticated future revenues, and adjusts this figure in regards to returns and inflation. NPV withal considers the time value of money concept. This is the concept that a Pound you have today is worth more than the promise or expectation that you will receive a Pound in the future. This is for many reasons, the 2 most conspicuous ones being that the Pound you hold today could be invested and gain interest in a deposit account. Withal, the Pound you receive in the future will have less purchasing power than the pound you have today, due to the inflation. By taking this into consideration, the NPV method can more accurately determine whether a project is worth initiating, when compared to other methods of project appraisal, such as the Payback method. NPV can be used when deciding on new investments, or for comparing alternative forms of investment.
The NPV value indicates whether
Project Appraisal- Net Present Value and Internal Rate of Return
Driss Fares-Introduction
In this report, I aim to present a thorough outline of a method of project appraisal: Net Present Value (NPV). This is a dynamic investment appraisal that utilizes a discounted cash flow method. Along with the IRR (internal Rate of Return), the NPV method is regarded as more comprehensive than the simpler, more traditional Payback method. It withal considers the time value for money principle. I will compare it to a simpler method of project appraisal: the Payback method. This is a much simpler method, conventionally used by diminutively minuscule businesses. I will consider the strengths and impuissance 's of both methods, and what implicative insinuations these have when choosing which method to utilize. Lastly, I will provide a demonstration of the NPV method utilizing Microsoft Excel.
-NPV method of Project Appraisal
NPV, or net present value, is a method of project appraisal. It compares the initial cost of the project, with prognosticated future revenues, and adjusts this figure in regards to returns and inflation. NPV withal considers the time value of money concept. This is the concept that a Pound you have today is worth more than the promise or expectation that you will receive a Pound in the future. This is for many reasons, the 2 most conspicuous ones being that the Pound you hold today could be invested and gain interest in a deposit account. Withal, the Pound you receive in the future will have less purchasing power than the pound you have today, due to the inflation. By taking this into consideration, the NPV method can more accurately determine whether a project is worth initiating, when compared to other methods of project appraisal, such as the Payback method. NPV can be used when deciding on new investments, or for comparing alternative forms of investment.
The NPV value indicates whether
Bibliography: http://accountingexplained.com/managerial/capital-budgeting/npv http://www.financeformulas.net/Net_Present_Value.html http://www.investopedia.com/terms/i/irr.asp