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For what value of W will the NPV of the series of cash flows be zero...

For what value of W will the NPV of the series of cash flows be zero at 12% per period interest rate? please use excel and the Goal seek function solving for W. and explain work please....the answer is one of the four

Year

Cash Flow

0

+$25000

1

-4W

2

18W

3

-16W

4

48W

5

-64W

6

42W

7

-256W

8

52W

9

-64W

10

42W

11

-256W

12

52W

$98

$124

$167

$184

Solutions

Expert Solution

Option C $167 is correct
To calculate value of W, We can find NPV which should be equal to zero
Year 1 2 3 4 5 6 7 8 9 10 11 12 Disc. Outflow
Flow                -4               18              -16               48              -64               42           -256               52              -64               42           -256               52
Disc rate=1/(1+12%)^n     0.89286     0.79719     0.71178     0.63552     0.56743     0.50663     0.45235     0.40388     0.36061     0.32197     0.28748     0.25668
Disc Flow        -3.571       14.349      -11.388       30.505      -36.315       21.279 -115.801       21.002      -23.079       13.523      -73.594       13.347         -149.745
NPV must be equal to zero so 25000-149.745W=0
W=25000/149.745
W=167

jeff jeffy answered 2 years ago
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