Question
In: Finance
1. Assume you have the following cashflows Time: 0 1 2. 3 4 5 Cf: 21...
1.
Assume you have the following cashflows
Time: 0 1 2. 3 4 5
Cf: 21 4 5 6. 6(1 + .02). 6(1+.02)^2
After year 3 cashflows will grow by constant 2% rate
What is the discounted present value of these cashflows if
your project's cost of capital is 13%?
Solutions
Expert Solution
Net Present value has to be calculated using NPV function in EXCEL
=NPV(rate,Year1 to Year5 cashflows)-Year0 cashflow
=NPV(13%,Year1 to Year5 cashflows)-21=-$2.24
| cost of capital | 13% |
| Year0 | -21 |
| Year1 | 4 |
| Year2 | 5 |
| Year3 | 6 |
| Year4 | 6.12 |
| Year5 | 6.24 |
| NPV | -2.24 |
jeff jeffy answered 2 years agoRelated Solutions
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