Cardinal Health

The first project is for Micron Technology. The net present value analysis will be used to evaluate this project. The net present value (NPV) technique involves discounting future cash flows to present dollars, to take into account the firm's opportunity cost of capital. As a basic rule, projects that have a positive net present value will add value to the company above and beyond existing operations. All such projects with a positive NPV should be accepted, while projects with a negative NPV should be rejected.

There are a few different approaches to calculating the net present value, but they are all fundamentally the same, based on the principle of discounted cash flow analysis. The first flow is the initial cash outlay. Because this particular cash flow is made today, it is not discounted. This is because payments made today are already in present value format. Future cash flows,...
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