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CAIE A-Level Business 10.3.3 Net Present Value

Practise multiplying each future cash flow by its discount factor, subtracting the initial investment and interpreting positive or negative NPV as part of an investment decision.

Syllabus
2026–2028
Course
Business 9609
Level
A2

Exam points

  • multiply each year's net cash flow by the matching discount factor before summing present values
  • subtract the initial investment from total discounted cash flows and retain the correct sign
  • interpret positive or negative NPV relative to the discount rate without treating it as the only criterion

10.3.3—NPV question 1

[Maximum number: 2]

Refer to Table 1.1. Calculate the net present value (NPV) of the new grinding machine.

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