Impact of Vacuum-Drying on Efficiency of Hardwood Products

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Impact of Vacuum-Drying on Efficiency of Hardwood Products ( impact-vacuum-drying-efficiency-hardwood-products )

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Zhang (2009) describes the Net NPV as: “the total present value of all the investment spent on a project subtracted from all the revenue gained from the project over a certain time period. An interest rate is used to discount future spending or revenue into current value.” Arati (2009) describes the net present value (NPV) as: “the sum of the expected net cash flows, measured in today’s dollars. Today’s dollars implies the present value (PV) of receipts and expenditures (cash flows).” The NPV is used to compare the economic viability between different projects. Present value is calculated by multiplying future expenditures and receipts by the appropriate discount rate, the formula to calculate the NPV is (Zhang 2009): Where i: is the interest rate; t: is the year; n: is the economic life of a system Rt: is the revenue earned, which is also the water bill reductions in year t Ct: are the cost of a system in year t, including initial costs, operation costs and maintenance costs. A positive NPV indicates that a project is economically viable, while a negative indicates that it is not viable (Zhang 2009). This rule can be helpful when comparing two or more projects to determine which one is more feasible. Some of the advantages in using NPV as a financial tool are the following (Erturk 2011): 1. It shows the overall profitability of a project 2. It provides a very sharp criterion to accept or reject a project: Only the projects having positive NPV should be accepted. 20

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