Net Present Value NPV PV of cashflows - initial cost = NPV

NPV positive --- acccept

NPV Negative --- Reject
Higher NPV is better

0 1 2 3
-100 20 25 35

PV of CF ₹ 92.46
Cost 100
NPV ₹ -7.54 Reject

Year 0 1 2
Cash
Bethesda Flows (In -50,000,000 4,000,000 6,000,000
USD)
4,000,000 10,000,000
PV of CF ₹ 50,001,999.03 8.09117%
CO 50000000
PV = FV/(1+r)^n NPV ₹ 1,999.03

Year 0 1 2
Cash
Flows (In -50,000,000 10,000,000 27,000,000
Bungie USD)
9251549.63 23109616
PV of FCF ₹ 52,755,796.65
CO 50000000 11%
NPV ₹ 2,755,796.65

IRR Internal rate of rate rate at which the project generates its cash

PI Profitability Index relative mearsure ---CI to its CO

Indexes its CO to 1 and compares to CI
 PI PV of CI / CO

0 -100 cumulative inflows

1 20 20
2 25 45
3 35 80
4 40 120
 10%

4
40
PI 92.46/100 0.9246
7%
PI >1 accept
IRR ---COC PI < 1 reject
IRR< COC ---- reject

8.09%
3 4 5

15,000,000 15,000,000 27,000,000

4 full years and portion of 5th year
25,000,000 40,000,000 67,000,000 0.370
1.0000400
4.37 years

3 4 5

15,000,000 7,000,000 5,000,000 0

11877764 5128093.94 3388772.55 52755796.65 1

2
1.06 3
4
5

the project generates its cashflow

sure ---CI to its CO

O to 1 and compares to CI
 Accept Accept conflict
A B
NPV 100 95 A
PI 1.05 1.05 Neutral
IRR 20% 22% B

3 full years +Portion of 4th year

balance to recover /cashflow of that year

0.5

3.5 years
-50,000,000

10,000,000 10,000,000
27,000,000 37,000,000
15,000,000 52,000,000 2 0.866667
7,000,000 2.86 years
5,000,000