NPV, IRR, Cash Flow, and Project Evaluation Tools and Methods

We have written a few key articles on the area of cash flow analysis here at DiscussEconomics. This article will give you a quick summary of each article and correlating link for easy review of each topic. Feel free to book mark and link to this page.

• Cash Flow Analysis Introduction: Intro to cash flow analysis as one of the most important pieces of financial information for a firm.
• Net Present Value (NPV) of Cash Flow Analysis: The topic of net present value of cash flow (or NPV), measuring and comparing benefits and costs, including formulas.
• Using NPV and Interest Rates for Discount Purposes: The NPV of any project is sensitive to the interest rate used for discounting cash flows (costs, which usually occur at time 0, are not discounted, while cash inflows closer to the end of the project are heavily discounted). Formulas included.
• IRR is an indicator of the efficiency or quality of an investment, as opposed to net present value (NPV), which indicates value or magnitude. Read about the IRR rule.
• Sensitivity Analysis in Project Evaluation: Many times the variables that underlie cash flows or the interest rate for discount purposes are not known with certainty, so firms estimate them and use the best guessed values to perform the necessary project analysis….
• Top Five Cash Flow Analysis Methods: The first step in this analysis is to calculate the cash flows and discounted cash flows (with the previous years’ cash flows (up to and including the current year) and will show how much money is still invested or tied in the project at this time. appropriate signs) generated by the project. Based on them we can calculate the following….