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Summary ACC626 WK5 Assignment ACC 626 ACC 626 Accounting in a Global Environment Week 5 Assignment Case 10-1 Felix Machine Company According to Doupnik, Finn, Gotti, & Perera, €œThe net present value (NPV) of an investment is the difference between the initi$7.49
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Summary ACC626 WK5 Assignment ACC 626 ACC 626 Accounting in a Global Environment Week 5 Assignment Case 10-1 Felix Machine Company According to Doupnik, Finn, Gotti, & Perera, €œThe net present value (NPV) of an investment is the difference between the initi
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UAGC
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Ashford University
ACC626 WK5 Assignment ACC 626 ACC 626 Accounting in a Global Environment Week 5 Assignment Case 10-1 Felix Machine Company According to Doupnik, Finn, Gotti, & Perera, €œThe net present value (NPV) of an investment is the difference between the initial investment and the sum of the present ...
acc626 wk5 assignment acc 626 acc 626 accounting in a global environment week 5 assignment case 10 1 felix machine company according to doupnik
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ACC 626
ACC 626 Accounting in a Global Environment
Week 5 Assignment
Case 10-1 Felix Machine Company
According to Doupnik, Finn, Gotti, & Perera, “The net present value (NPV) of an
investment is the difference between the initial investment and the sum of the present values
of all future after-tax net cash inflows from the investment.” It accounts for capital budgeting
and the initial investment that is required to fund a project, making it a net figure. “NPV
looks to assess the profitability of a given investment on the basis that a dollar in the future is
not worth the same as a dollar today,” says Fernando (2021). This paper will analyze the
Felix Machine Company by calculating the net present value (NPV) of a proposed investment
in India from a project perspective and a parent company perspective.
Calculations of the Net Present Values amounts could be either positive, negative, or a
zero amount. “A positive NPV means that the investment is expected to provide a rate of return
on the initial investment greater than the discount rate used to calculate present values, whereas
a negative NPV means that the return provided would be less than the discount rate. If the NPV
is zero, the project is expected to provide a rate of return exactly equal to the discount rate
(Doupnik, 2020)”. When there is a negative NPV, the project or investment should be avoided
due to its low rate of return. However, having a positive or zero NPV on investment is more
attractive due to its projected positive rate of return.
To calculate NPV from a project perspective, IWC begins by calculating cash flow from
operations (CFO) in Hungarian forints over the three-year investment horizon. The formula that
will be used to calculate the project perspective is CFO= Earnings (after tax) + Depreciation.
Using this formula, we can conclude the following:
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