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Pages:
1 page/β‰ˆ275 words
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3 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
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MS Word
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Total cost:
$ 4.68
Topic:

Accuracy of the net Present Value

Essay Instructions:

How accurate do you think a company's estimates of the net present value of a proposed project are? Refer to both the initial investment and to the components of the cash flow: revenues, operating expenses, depreciation, taxes, and the cost of capital to use for the computation of the present value.    

Keep in mind that NPV is the value in today's dollars of cash flows to be received some time in the future minus what we have to pay today to get those cash flows.    

Which of the following do you think would give you the most accurate NPV calculation:  (a) a brand new retail startup (b) a pharmaceutical company introducing a new drug (c) a company with a successful product in Chile trying to introduce it to the USA.

Do research on the Internet and show the reference for the information. Don't forget to respond to a colleague's posting also.

Professor’s Note: In addition to searching the Internet for text related to this threaded discussion, please watch the following videos (click on the following link to access these videos) and post your comments.    

http://www(dot)youtube(dot)com/watch?v=jylJ2r9bklE   Episode 99: How to Calculate Net Present Value

http://www(dot)youtube(dot)com/watch?v=uNcBWALtLHU What is NPV?

Grading Criteria: Try to add information not previously discussed by others. Please, provide factual information (not merely opinions) backed up by details or examples. Your comments should be in your own words and include references. 

Essay Sample Content Preview:

Accuracy of the net present value
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As the net present values are dependent to the projected cash flows of a future specific period, these results therefore vary in accuracy. All aspects of a business structure are involved in pre-population and analysis of the net present value. These aspects of a business model, used in a business structure are the amount of current revenues, current operational expenses, depreciation value of currency, taxes and other payable liabilities and the total cost of capital(Kuratko, 2014).
While trying to calculate the net present value and its accuracy for a brand new retail start-up, we will take this into consideration; the fact that there are a lot of business running on retail base structure around makes it easier to come up with a comparison to gather information needed to tabulate the net present value. However a good cash flow analysis would not be done. This is because even though comparable inform...
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