Page 85 - CFA - Day 1 & 2 Course Notes
P. 85
LOS 7.a: Calculate and interpret the
net present value (NPV) and the Session Unit 2: Discounted Cash Flow Applications
internal rate of return (IRR) of an investment.
Example: Computing NPV
Calculate the NPV of an investment project with an initial cost of $5 million and positive
cash flows of $1.6 million at the end of Year 1, $2.4 million at the end of Year 2, and $2.8
million at the end of Year 3. Use 12% as the discount rate.
