Hello

I come from a technical background, PhD in Engineering not MBA. I have a few questions about the NPV and I appreciate it if someone can clarify the following.

1- Can someone please explain what is expected from advanced degree candidates to know about NPV during a case interview? every time I look it up or come across a case using NPV, they use a different approximation/method to calculate the NPV. It is becoming very confusing to me.

A Few NPV equations that I came accross are:

NPV = -Initial Investment + (Future Value of Money/Discount Rate)

NPV = Future Value of Money / Discount Rate

(usually Future Value of Money = Revenues - ongoing costs) - I think not sure!

- How you would interpret an NPV value?

2- **There is a case in which we determine the following(the first half is all about determining the R and C as follows: **

- Revenues = 928 M$

- Costs = 574M $

- Profits = R -C = 354M $

**Then there is this given which I totally did not understand (no clairification as to what it means): **

- Time value of money: 6 year lag for receipt of revenue

**to Determine the NPV they used WAAC (I have no idea what is this): **

Using the “Rule of 72,” we know that 72/rate of return means the number of years to double our money. With a six year lag and a 12% WACC, we know that all future cash flows must be halved

$354/2 = $177M in present value (NPV)

clearly the 12% is 72/6 (lag years)

Can someone please explain what is WAAC? Why NPV is halved?

(edited)