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:
- Phnom Penh HR
- Mcgraw-Hill – Fundamentals Of Corporate Finance