Question

In: Finance

For the following set of cash flows, Year Cash Flow 0 –$8,700 Year1 Cash Flow $5,600...

For the following set of cash flows,

Year Cash Flow 0 –$8,700

Year1 Cash Flow $5,600

Year 2 Cash Flow $6,100

Year 3 Cash Flow $4,300

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

b. What is the NPV at a discount rate of 12 percent?

c. What is the NPV at a discount rate of 24 percent?

d. What is the NPV at a discount rate of 29 percent?

Solutions

Expert Solution

Use NPV function in EXCEL to find the NPV's

=NPV(rate,Year1 to Year3 cashflows)-Year0 cashflow

NPV at 0%=NPV(0%,Year1 to Year3 cashflows)-8700=$7300

NPV at 12%=NPV(12%,Year1 to Year3 cashflows)-8700=$4223.54

NPV at 24%=NPV(24%,Year1 to Year3 cashflows)-8700=$2038.65

NPV at 29%=NPV(29%,Year1 to Year3 cashflows)-8700=$1309.82

Cashflows
Year0 -8700
Year1 5600
Year2 6100
Year3 4300
0% NPV 7300.00
12% NPV 4223.54
24% NPV 2038.65
29% NPV 1309.82

jeff jeffy answered 2 years ago
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