RE: Grandich interview with Dunham Craig Awesome article!
One (probably stupid) question: I've never understood the discount sensitivity on the NPV.
The interview says: "According to the Study’s estimates, Tepal’s NPV, post tax and using a 5% discount, will be $421 million, providing an IRR of 28%. Post tax at a 0% discount, the NPV would be $925 million, providing an IRR of 36%"
So, at 0% discount we're at $421M, and at 5% discount we're at more than double.
Ok, can someone explain exactly *what* we're "discounting" here, and why it has such a huge impact in the NPV?
Cheers,
-RK