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I'm calculating the NPV for a project, the project has an investment now and an investment in 12 months, it says the production will start in 12 months and once the production starts the project will last 7 years, does this mean that NPV needs to be calculated for 8 years instead of 7 years? please advise

user126611
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2 Answers2

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That's how I read it - the last cash flow will be 8 years from today, 7 years from the start of production in one year. (I'm assuming that the cash inflow from the "production" is counted at the end of the year)

So you should have two cash outflows for the first two years (0 and 1), then 7 cash inflows for years 2-8).

Again, that's my interpretation of the question. If this is a school assignment double-check with your teacher.

D Stanley
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So you invest at the beginning(lets say year 0). Then you invest after 12 months(1 year). That's year 1. Production starts now and the project continues for 7 years. So that would be from year 1 to 7. Therefore total years = 8 (including year 0).

Trickster69
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