How do I calculate net present value (NPV) after 4 years?

[marvelcomicsguy]

Hi!

I am an absolute noob when it comes to business maths and I really need some help. This basic Net present value question is driving me crazy. I know it's probably really simple but I just can't seem to get the same answer as the question suggest for the NPV after 4 years.

Could someone shed some light of the formula for calculating 4 years? I should then be able to calculate for years 2 and 3 myself!

View attachment 3802 Thanks in advance.

 

[jvicens]

Hi there!

Calculating net present value (NPV) can be tricky, but once you understand the formula, it becomes much easier. NPV is a way to determine the present value of future cash flows, taking into account the time value of money and the cost of capital.

To calculate the NPV after 4 years, you will need the following information:

1. Initial investment (usually denoted as C0)
2. Expected cash flows for each year (denoted as C1, C2, C3, etc.)
3. Discount rate (usually denoted as r)

The formula for calculating NPV is:

NPV = C0 + (C1 / (1+r)^1) + (C2 / (1+r)^2) + (C3 / (1+r)^3) + ... + (Cn / (1+r)^n)

Where n is the number of years and r is the discount rate.

So for your specific question, you will need to plug in the values for each year (C1, C2, C3, and C4) and the discount rate into the formula to get the NPV after 4 years. Make sure to use the same units for all the values (e.g. dollars, pounds, etc.) and to use the same discount rate consistently.

If you are still having trouble, feel free to provide the specific numbers in the question and I can walk you through the calculation step by step.

Best of luck!