FIN.17:5.2 - A changed value premise reaches the purchase advice

Another constructed appraisal compares an immediate outlay of 100 with two annual cash receipts of 60. On a supplied matching annual rate of 10%, value is about 104.13 and NPV is +4.13. The recommendation is therefore sensitive to fairly small changes in the qualified cash and return grounds.

Suppose a newly supported risk basis raises the matching rate to 12%, while an operating change reduces each receipt to 55. Rate-only recomputation on the original flows gives value about 101.40 and NPV +1.40. Applying the changed cash at 12% gives value about 92.95 and NPV −7.05. That sequential bridge explains a rate contribution of about −2.73 followed by a cash contribution of about −8.45. Reversing the sequence changes the attributed intermediate contributions; the combined final result is the same.

FIN.5 supplies the changed return basis and FIN.4/6 supply the altered flows. FIN.17 carries them together to the relied-on value, while FIN.16 revises the purchase advice. If the purchase is still optional, the prior positive-NPV recommendation is no longer supported at price 100. If it is already binding, the remaining decision concerns its attainable continuation; the historical outlay is not made avoidable by recalculating NPV.