Question

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?

Answer 1

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