Describe the Method of Calculating the Net Present Value (NPV)

question 15

Essay

Describe the method of calculating the net present value (NPV) in Excel.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into full units of output for reporting purposes.

Work in Process Inventory

Items that are partway through their manufacturing process but have not yet reached their final form.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measured in terms of the amount of finished goods those partial items represent.

Weighted Average Method

A cost accounting method that calculates the cost per unit of inventory by considering the weight of each period’s inventory cost.