Question
In: Finance
For the following set of cash flows,
For the following set of cash flows,
| Year | Cash Flow |
| 0 | –$8,800 |
| 1 | 5,900 |
| 2 | 4,000 |
| 3 | 6,100 |
| A)What is the NPV at a discount rate of 0 percent? |
| B) What is the NPV at a discount rate of 13 percent? |
| C) What is the NPV at a discount rate of 21 percent? |
| D) What is the NPV at a discount rate of 26 percent? |
Solutions
Expert Solution
Ans a) 7200.00
b) 3781.43
c) 2251.38
d) 1451.49
| Year | Project Cash Flows (i) | DF@ 0% | DF@ 0% (ii) | PV of Project ( (i) * (ii) ) | DF@ 13% (iii) | PV of Project ( (i) * (iii) ) | DF@ 21% (iv) | PV of Project ( (i) * (iv) ) |
| 0 | -8800 | 1 | 1 | (8,800.00) | 1 | (8,800.00) | 1 | (8,800.00) |
| 1 | 5900 | 1/((1+0%)^1) | 1.000000 | 5,900.00 | 0.885 | 5,221.24 | 0.826 | 4,876.03 |
| 2 | 4000 | 1/((1+0%)^2) | 1.000000 | 4,000.00 | 0.783 | 3,132.59 | 0.683 | 2,732.05 |
| 3 | 6100 | 1/((1+0%)^3) | 1.000000 | 6,100.00 | 0.693 | 4,227.61 | 0.564 | 3,443.29 |
| NPV | 7,200.00 | NPV | 3,781.43 | NPV | 2,251.38 |
| Year | Project Cash Flows (i) | DF@ 26% | DF@ 26% (ii) | PV of Project ( (i) * (ii) ) |
| 0 | -8800 | 1 | 1 | (8,800.00) |
| 1 | 5900 | 1/((1+26%)^1) | 0.793651 | 4,682.54 |
| 2 | 4000 | 1/((1+26%)^2) | 0.629882 | 2,519.53 |
| 3 | 6100 | 1/((1+26%)^3) | 0.499906 | 3,049.43 |
| NPV | 1,451.49 |
jeff jeffy answered 2 years agoRelated Solutions
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