Using Discounted Cash-Flow Analysis to Make investment Decisions - Indentifying Cash Flows
4 important questions on Using Discounted Cash-Flow Analysis to Make investment Decisions - Indentifying Cash Flows
What does a positive NPV mean?
City Consulting Services is considering moving into a new office building. The cost of a 1-year lease is $8.000, paid immediately. This cost will increase in future years at the annual inflation rate of 3%. The firm believes that it will remain in the building for 4 years. What is the present value of its rental costs if the discount rate is 10%?
What is the present value? - real
What are the 4 inflation rules?
2. Use nominal interest rates to discount nominal cash flows
3. Use real interest rates to discount real cash flows
4. You will get the same results, whether you use nominal or real figures
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What do you need to ignore when valuing a project?
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