But sometimes, the back period, maybe sometimes during the year. In such a situation, to actually determine the period will be as follows. For example, a project of ₦150,000 as the initial cost with the following returns in years 1 to 6, ₦40,000, ₦45,000, ₦47,000 ₦43,500, ₦37,500 will be calculated thus:Year 3 profit 47,000 18,000 severe technicality and, as such, can be easily used by anybody.
It is also factual that cash flows are connected with the type of operations involved in and hence ranking projects of different nature may be misleading. A poultry farmer will generate more early income than a plantation farmer and comparing them at the initial stage may be unjust. A Positive NPV means that the project is profitable and hence should be accepted. In contrast, a negative NPV, on the other hand, points to an unprofitable project that should be rejected. However, a zero NPV means that the project is at the break-even point and as such, acceptance or rejection will depend on the decision maker’s attitude.