IB skill practice

Calculate net present value

Discount future cash flows and subtract the initial investment.

Paper 1, Paper 2 5 marks Difficulty 3

Calculate net present value - exam scenario

An environment group project costs 8250 now and returns 2600 at the end of each year for 5 years. Use discount rate 5% to calculate the net present value. Enter the requested value and choose the interpretation that matches the result.

Worked practice: result and interpretation

Calculate the requested result first, then choose the interpretation that follows from it.