Question

Determine the net present worth (NPW) of the cash flows given in table below for an investment opportunity being presented to a company. MARR =10%. Year 0 1-10 11-15 16-25 26-30 Cash Flow -$100K 10K 20K -5K 30K

Answer 1

Solution:-

NPW of cash flows is computed as follows.

Years	Cash Flow	PV Factors @10%	Discounted Cash Flows ($)
0	-1,00,000	1.0000	-1,00,000
1	10,000	0.9091	9,091
2	10,000	0.8264	8,264
3	10,000	0.7513	7,513
4	10,000	0.6830	6,830
5	10,000	0.6209	6,209
6	10,000	0.5645	5,645
7	10,000	0.5132	5,132
8	10,000	0.4665	4,665
9	10,000	0.4241	4,241
10	10,000	0.3855	3,855
11	20,000	0.3505	7,010
12	20,000	0.3186	6,373
13	20,000	0.2897	5,793
14	20,000	0.2633	5,267
15	20,000	0.2394	4,788
16	-5,000	0.2176	-1,088
17	-5,000	0.1978	-989
18	-5,000	0.1799	-899
19	-5,000	0.1635	-818
20	-5,000	0.1486	-743
21	-5,000	0.1351	-676
22	-5,000	0.1228	-614
23	-5,000	0.1117	-558
24	-5,000	0.1015	-508
25	-5,000	0.0923	-461
26	30,000	0.0839	2,517
27	30,000	0.0763	2,288
28	30,000	0.0693	2,080
29	30,000	0.0630	1,891
30	30,000	0.0573	1,719
		NPW ($) =	-6,183