Question

For the following set of cash flows,

  

Year	Cash Flow
0	–$7,600
1	4,700
2	3,300
3	5,000

  

a. What is the NPV at a discount rate of 0 percent?

  

b. What is the NPV at a discount rate of 11 percent?

  

c. What is the NPV at a discount rate of 22 percent?

d. What is the NPV at a discount rate of 27 percent?

Answer 1

Ans a) $ 5400.00

b) $ 2968.55

c) $ 1223.14

d) $ 587.74

Year	Project Cash Flows (i)	DF@ 0%	DF@ 0% (ii)	PV of Project ( (i) * (ii) )
0	-7600	1	1	(7,600.00)
1	4700	1/((1+0%)^1)	1.000000	4,700.00
2	3300	1/((1+0%)^2)	1.000000	3,300.00
3	5000	1/((1+0%)^3)	1.000000	5,000.00
		NPV	5,400.00

Year	Project Cash Flows (i)	DF@ 11%	DF@ 11% (ii)	PV of Project ( (i) * (ii) )	DF@ 22% (iii)	PV of Project ( (i) * (iii) )	DF@ 27% (iv)	PV of Project ( (i) * (iv) )
0	-7600	1	1	(7,600.00)	1	(7,600.00)	1	(7,600.00)
1	4700	1/((1+11%)^1)	0.900901	4,234.23	0.820	3,852.46	0.787	3,700.79
2	3300	1/((1+11%)^2)	0.811622	2,678.35	0.672	2,217.15	0.620	2,046.00
3	5000	1/((1+11%)^3)	0.731191	3,655.96	0.551	2,753.53	0.488	2,440.95
		NPV	2,968.55	NPV	1,223.14	NPV	587.74