In this video I have explained Net Present Value technique of Capital Budgeting. We have also solved a problem on NPV.
After watching this video you will be very confident in this NPV technique.
Here we have also seen the time value of money and how to discount the cash flows of an investment project.
⏱TIMESTAMPS
0:00 – Intro
0:08 – Concept
2:40 – Time Value of Money
6:26 – Format of NPV
8:21 – Problem
Previous Video: Average Rate of Return (ARR)
Next Video: Internal Rate of Return
Financial Management Playlist:
This is for the students of B.COM, BBA, CA INTER, CMA and any other accounting courses which has this chapter in its syllabus.
PDF Notes
Clear your doubts by direct messaging us on Instagram
Please Like, Subscribe and Share this video on your social media account.
#financialmanagement #bba #bcom #cma
because of you, we, the students of an unnamed prestigious institute are going to pass the economics test tomorrow. This shows how incompetent the faculty we have here are.
Ur voice such a osm.. I understood all the concept. Thnku❤
Sir I'm not able to get the discounting factors in the calculater 😢😢😢…. please help me
Beautiful explanation 🔥
Y Project to accepted as u said but i need clarification plz that both projeccts x and y has not same amt of investment 40000 for x and 60000 for y. according to my thinking project x should be accepted as it has NPv of 8454 i.e inflows good wjen compared to y's 945x
. Nottingham Cars Plc is planning to manufacture a new electric car. The new car, which has a product design life of 5 years, will require installation of a conveyor belt which will cost £100,000. At the end of its life, the machine can be sold for £10,000.
Demand for the new vehicles is expected to be 12,000 units in year 1 and 15,000 units in each of years 2 to 4. In the final year, it is estimated that only 8,000 units will be sold as new technology will overtake the design.
The sale price will be £12,000 per unit; direct labour, direct material and variable overheads will cost £6,000 per unit and additional fixed expenses of £50,000 per annum will be incurred. Ignore depreciation and taxes. A discount rate of 12% should be applied to the project.
Required:
a. Using the Net Present Value (NPV) method, recommend to the company whether it should undertake the investment. Show all workings
Sir this is the question please give me a some tips to solve this plz
bro, sometimes discount factor will not be give then the formula to find discount factor is ( 1+r )^n
How to decide Discounting factor?
Tqsm🥰
Searching lots of videos in YouTube this video is really helpful 😊
Sir thanks you always helped me from my 12 th boards now iam at sy bcom Still watch your videos and very helpful
Thank you so much sir, I am from kerala. Studying BBA under calicut university. Tomorrow my 3nd sem financial management exam, so your class is very helpful to me & my friends. Again thank you a lot sir 🙏
If explained in hindi language than it must be most helpful thankyou
Sir mujhe bilkul bhi English nhi aati hai but aap ke lecture mujhe aache se samjh main aate hai thank you so much sir 🙏🙏🙏
Tq❤
In a case where the discounting factor is not given how do we get it sir?
Thank you very much for the explanation … we have one request brother as its an answering the question paper , if we are doing it as a finance analyst for the same and where we have to get the cash flows figures,( should it provided by the operational team regarding the collection )
17:32 calculater are not allowed in exam what we do
genious hai aap very intelligent
After watching about 25 other videos this onevwas my ahh haaa moment i get it not excellant job sir
A firm needs component in an assembly operation. If it wants to do the manufacturing itself, it would need to buy a machine for Rs. 400,000 which will last for 4years with no salvage value. Manufacturing costs in each of the 4 years would be Rs. 600,000, Rs. 700,000, Rs. 800,000, and Rs. 1 million respectively. If the firm had to buy the components from a supplier, the cost would be Rs. 0.9 million, Rs. 1 million, Rs. 1.1 million and Rs. 1.4 million respectively in each of the four years. However, the machine would occupy floor space which would have been used for another machine. This latter machine would be hired at no cost to manufacture an item, the sale of which would produce net cashflows in each of the four years of Rs. 0.2 million. It is impossible to find room for both the machines and there are no other external effects. The cost of capital is 10% and the present value factor for each of the four years is 0.909, 0.826, 0.751 and 0.683 respectively.
Should the firm make the components or buy from outside?
What will be its solution?
Thank you so much sir i am studying the whole chapter just before exam and only your videos are helping me out ❤️🥺
I feel video is playing in 1.5 x speed bro😁
Really helpful video but I didn't understand one thing the scrap value for x was given 2000 and y was given 4000 but you used 4k for project x too
most beautifully explained, thanks!
You are the real goat 🐐🙇♂️
Sir, i really thankful to you. I have an exam tomorrow, till now I haven't completed my practice because of queries but I cleared my all queries now, thank… you sooo much sir.
Thank you so much, but I have a question, what would I do if there was another cash outflow between those five years, how to calculate that?
Why not making a video on Break Even point
and ratio analysis?
Thank you so much. It helped me a lot! Very easy to understand.
Saviour 🤲
Thanks bro
Very good sir
I have an exam tomorrow and I'm watching this video today.. Hope it will help me.. Thank you🙏
Discount factor is not always given. Should have computed that on your calculator. That’s literally why I came 😔
Helpful as always, thank you very much
EXCELLENT!
How to calculate Df@10% for second year , (😅= is not working on my calculater)