Investment Decision Rules - Using the NPV Rule

4 important questions on Investment Decision Rules - Using the NPV Rule

How do you calculate the NPV in the following situation:
Investment now of x million
From next year on a cash inflow of y for n years, cost of capital is r.

NPV = -x + PV(inflow y for n years, discountrate r)

What is a NPV profile?

A graph plotting a projects NPV over a range of discount rates

Why is the difference between IRR and estimated cost of capital important when the estimation of cost of capital is unsure?

Because when the error margin of the estimation is larger than the difference between IRR and cost of capital it might turn out to be a negative investment
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When the NPV Decision Rule and another decision rule contradict, which rule has to overrule?

The NPV decision rule

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