Ann: Maiden Ore Reserve for the Razorback Iron Project, page-106

Hey Bull,

The easy way to explain NPV:

We all expect that our $100 is worth more in 12 months. We then reverse the scenario. If we have $110 in 12 months, and we anticipate 10% growth, then that becomes the $100 NPV.

The only real difference is they are calculating the NPV over a number of years and providing the answer in todays dollars.

An expanded example:

Consistent growth of 10% over 3 years

Yr 3 = 133.10
Yr 2 = 121.00
Yr 1 = 110.00
Yr 0 = 100.00

So in three years, the company expects the income to be $133.10, but in todays dollar value at a growth rate of 10%, you get the $100.

Bull, just thought I'd expand on your comment so that those without any financial background, or new to the share market, understand what is meant by NPV.

Cheers,

L