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How to calculate One-year NPV

The One-year NPV formula, with plain worked examples you can check yourself.

One-year NPV = CF ÷ (1 + r) − I

Worked examples

CF = 5830 · r = 10% · I = 5000One-year NPV = 300
CF = 1440 · r = 20% · I = 1000One-year NPV = 200
CF = 3630 · r = 10% · I = 3000One-year NPV = 300

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Valuation & Deals.

Related terms

Due diligenceMergerAcquisitionGoodwill

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