Net Present Value (NPV) for Mixture Project

Net Present Value (NPV) for Mixture Project

NPV for mixture project is mixed financing project and investing project, and its cash flows can be positive or negative after initial cash flow.

NPV= initial cash flow – sum of present value of each cash outflow + sum of present value of each cash inflow

Project decision:

•  if NPV>0=> accept the project
•  if NPV<0=>reject the project
•  if NPV=0=>indifference

Example:

NPV=-100+230/(1+r)¹ – 132/(1+r)² + 122/(1+r)³– 112/(1+r)⁴

or

NPV= -100 – [132/(1+r)²+ 112/(1+r)⁴ ]+ [230/(1+r)¹  + 122/(1+r)³]

Source:

1. Phnom Penh HR
2. Mcgraw-Hill – Fundamentals Of Corporate Finance