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Conceptual Overview: Explore how the timing and size of cash flows affect the net present values of two alternative investments. The blue curve (labeled L)
Conceptual Overview: Explore how the timing and size of cash flows affect the net present values of two alternative investments. The blue curve (labeled "L") depicts the NPV for a project with larger cash flows later of -$1,000, $100, $300, $400, and $675. The red curve (labeled "S") depicts the NPV for a project with larger cash flows sooner of -$1,000, $500, $400, $300, and $100. Drag on the graph either left or right to change the cost of capital interest rate at which the NPV is evaluated for the two projects. $100 = $300.00 (1+0.0000) N CF $500 Project S: NPV-CF0 + ?????=-$1 ,000 + (140.000 OT + (1+00000 )2 + Project L: NPV-CF0 + ? i??=-$1,000 + (1401000 ( 1-0.0000-?( 1-0.0000 + ( 3000F + (1-04000?+ (1 (1 +0.0000??( 1-0.0000)4 $675$475.00
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