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Essay / Research Paper Abstract
This 3 page paper considers how and why the structure and patterns in the competitive environment can have an impact on the way a net present value is calculated for a project. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TENPVcomp.rtf
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Unformatted sample text from the term paper:
is also a tool that is sensitive, and as such the competitive nature of a market may impact on the net present value of a project. In order to consider
how and why the net present value can impacted by the competitive nature of the markets it is first necessary to consider what the net present values measures. The
net present value is an approach that takes each years net return on a project (the revenue less the costs) and then discounts them to allow for the time value
of money, this may be discounting on a compound rate to allow for inflation, however the discount rate may also be the cost of capital, to account for the cost
to the firm. Following the addition of all the separate years net discounted revenue, the initial cost of the project it taken off, to leave a net present value. This
is a useful tool as it allows for different projects to be compared, even if they have different terms and risk profiles, there is also the ability to adjust the
discount factor used to account for issues such as risk and reward (Elliott and Elliott, 2008). The next consideration is how this tool is impacted by the market conditions.
A key input into the equation is the revenue that is produced; this will be impacted by the competitive position within the market. The concept and supply and demand has
a direct influence on the price, and as such the revenue, and profit that can be achieved for any good or service. Where there is a high level of competition,
where goods that are competing and/or substitutes are highly acceptable replacing each other there is more likely to be a supply that exceeds the aggregate demand, where this occurs the
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