What is the difference between discounted present value and net present value? What is the NPV of...

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Finance

What is the difference between discounted present value and netpresent value?
What is the NPV of the following cash flows, assuming a 6%discount rate?
Initial investment – year 0:$(1,000,000)
Year 1 cash flows: $100,000
Year 2 cash flows: $100,000
Year 3 cash flows: $100,000
Year 4 -sale: $1,200,000

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3.9 Ratings (512 Votes)

Part 1 In case of discounted present value the cash flows are discounted to the currentpresent date and no adjustment is made with respect to the initial capital outlayinvestment In other words discounted present value is merely a sum total of cash flows discounted to todays value occuring in the future See Answer

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What is the difference between discounted present value and netpresent value? What is the NPV of the following cash flows, assuming a 6%discount rate?Initial investment – year 0:$(1,000,000)Year 1 cash flows: $100,000Year 2 cash flows: $100,000Year 3 cash flows: $100,000Year 4 -sale: $1,200,000