Question
In: Finance
Calculate NPV for each project. Please workout problem.. Discount rate 10% Year Project A Project B...
Calculate NPV for each project. Please workout problem..
|
Discount rate |
10% |
|||
|
Year |
Project A |
Project B |
Project C |
|
|
2018 |
($3,000,000) |
($3,000,000) |
($3,200,000) |
|
|
2019 |
$0 |
$975,000 |
$985,000.00 |
|
|
2020 |
$600,000 |
$975,000 |
$925,000.00 |
|
|
2021 |
$900,000 |
$975,000 |
$1,000,000.00 |
|
|
2022 |
$3,000,000 |
$1,000,000 |
$950,000.00 |
|
Solutions
Expert Solution
Project - A
|
Year |
Cash Flow |
Present Value Factor |
Present Value of cash flow |
|
1 |
0 |
0.90909 |
0 |
|
2 |
600,000.00 |
0.826446 |
495,867.77 |
|
3 |
900,000.00 |
0.751314 |
676,183.32 |
|
4 |
3,000,000.00 |
0.683013 |
2,049,040.37 |
|
Total Present Value of cash flows |
3,221,091.46 |
||
Net Present Value = Present Value of cash flows – Initial Investment
= $3,221,091.46 – 30,00,000
= $221,091.46
Project - B
|
Year |
Cash Flow |
Present Value Factor |
Present Value of cash flow |
|
1 |
975,000.00 |
0.90909 |
886,363.64 |
|
2 |
975,000.00 |
0.826446 |
805,785.12 |
|
3 |
975,000.00 |
0.751314 |
732,531.93 |
|
4 |
1,000,000.00 |
0.683013 |
683,013.46 |
|
Total Present Value of cash flows |
3,107,694.15 |
||
Net Present Value = Present Value of cash flows – Initial Investment
= $3,107,694.15 – 30,00,000
= $107,694.15
Project - C
|
Year |
Cash Flow |
Present Value Factor |
Present Value of cash flow |
|
1 |
985,000.00 |
0.90909 |
895,454.55 |
|
2 |
925,000.00 |
0.826446 |
764,462.81 |
|
3 |
1,000,000.00 |
0.751314 |
751,314.8 |
|
4 |
950,000.00 |
0.683013 |
648,862.78 |
|
Total Present Value of cash flows |
3,060,094.94 |
||
Net Present Value = Present Value of cash flows – Initial Investment
= $3,060,094.94 – 32,00,000
= -$139,905.06 [Negative NPV]
jeff jeffy answered 2 years agoRelated Solutions
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Please no excel sheet, just detailed steps for someone new in
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