The Timing of Costs and Benefits

• Discounted Cash Flow Example (i=20%)

  • Net Present Value (NPV) = 3,639 (sum of annual present values)

This Year

Next Year

Year After

Cash Flow In

2,000

3,000

4,000

Cash Flow Out

1,000

1,500

2,000

Net Cash Flow

1,000

1,500

2,000

Discount Ratio

1

1.2

1.44

Present Value

1,000

1,250

1,389

Previous slide

Next slide

Back to first slide

View graphic version