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How do you calculate Net Present Value in finance?

Discount Rate= 15%

Cash Flows for next 4 years: $185, $203, $224, & $228

Investment= $300

2 Answers

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  • Coco
    Lv 7
    8 years ago
    Favorite Answer

    (185/1.15) + (203 / 1.15^2) + (224 / 1.15^3) + (228 / 1.15^4) = 516.40

    Net Present Value = 516.40 - 300 = 216.40

  • Don G
    Lv 7
    8 years ago

    Compare the 300 investment with the PV of the future cash flows, discounted at 15%.

    The NPV is 292 positive. (PV of future cash flow 592 - 300)

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