跨国公司财务决策的净现值和增量现金流Net Present Value and Incremental Cash Flow for Multinational Corporations in Making Financial Decisions
1. Net Present Value (NPV)净现值（净现值）
1.1 The Definition of NPV1.1 NPV的定义
为了计算NPV，首先根据贴现率生成一系列现值利率因子（PVIF）。 然后，每年的现金流量乘以PVIF，达到现值。 汇总所有现金流量，我们将获得项目的NPV。In finance, the net present value (NPV) is defined as the present value of all the future incoming and outgoing of the same entity, with a discount rate selected according to the riskiness of the project, normally higher than the risk-free interest rate.
To calculate NPV, a series of present value interest factor (PVIF) is first produced, based on the discount rate. Then, the cash flow of each year is multiplied by the PVIF to get to the present value. Summing all the cash flow up, we will obtain the NPV of the project.
Table of Contents
1. Net Present Value (NPV) 11、净现值（NPV）1。
1.1 NPV 1的定义
1.1 The Definition of NPV 1
1.2 Valuation for Investment 2
1.3 Comparison of NPV with Other Criteria 2
2. Incremental Cash Flow 4
2.1 The Definition of Incremental Cash Flow 4
2.2 Factors Influencing the Incremental Cash Flow 4
2.3 Example 6
For the multinational corporation, if it were to invest in a new car factory in China, the corporation needs to estimate how the car factory could affect the current cash flow of it, which is based on the estimation of incremental cash flow.
First, the initial capital expenditure of setting up a new car factory needs to be figured out, including the cost of the plant and equipment, etc. Second, the estimation of the incremental sales of the cars can be made, based on the situation of the car market in China and all over the world. Third, we need to estimate the total operating cost, including the operating cost in cash, such as salaries, materials, etc. and noncash operating cost, such as the depreciation cost of the plant and equipment. Then, we can use the incremental sales minus the total operating cost and add back noncash operating cost to calculate the incremental cash flow.
At last, according to the financing cost and opportunity cost of capital, the multinational corporation will decide on the interest rate to discount the incremental cash flow of the car factory. If the NPV of the new car factory is positive, then the investment opportunity is a good choice for the corporation.