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Lecture6 Present Value Method - 2
Lecture6 Present Value Method - 2
Lecture6 Present Value Method - 2
Techniques
2
Lecture 7 - Dr. Shree Raj Shakya
Project Evaluation techniques
With the background of knowledge of
interest rate and time value of money, we
can evaluate whether a project is
feasible or not on the basis of cash flow
equivalence methods.
Example:
Initial Investment = Rs 300,000
Annual Net benefits = Rs 75,000
Payback period
= Initial investment/ Uniform Annual benefit
=4 years
Benefit: simplicity
NPV Criterion
N
NPV An (P / F, i, n )
n 0
(1 r) n - 1
PV A n
NRs.1,496,000
r (1 r)