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NPV:
The net present value (NPV) or net present worth (NPW)[1] of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values(PVs) of the individual cash flows of the same entity.
The net present value takes into account the incoming and outgoing of the company, by using the following formula we discount our future profits to get a realistic figure of what they are worth currently
Discount rate
Using an excel calculator we calculated that for a profit of 55 million expected after 10 years, it is currently worth 46 million.
IRR
Using an NPV of 46 million and a terminal value of 85,000 a goal seek function was used to identify R and returned a value of approximately
12%