A project has the following cash flow. Years Costs Benefits 0 $10,000 0 1 $1,000 $5,000...

A project has the following cash flow.

Years	Costs	Benefits
0	$10,000	0
1	$1,000	$5,000
2	$1,000	$5,000
3	$2,000	$6,000
4	$20,000	$3,000 a) Find net present value b) Discounted Benefit-Cost Ratio c)Net discounted Benefit-Cost Ratio discount ratio is 10%

Expert Solution

Year	Cost	Benefits	Total	DF	PV
0	$ -10,000.00	$ -	$ -10,000.00	1	$ -10,000.00
1	$ -1,000.00	$ 5,000.00	$ 4,000.00	0.900901	$ 3,603.60
2	$ -1,000.00	$ 5,000.00	$ 4,000.00	0.811622	$ 3,246.49
3	$ -2,000.00	$ 6,000.00	$ 4,000.00	0.731191	$ 2,924.77
4	$ -20,000.00	$ 3,000.00	$ -17,000.00	0.658731	$ -11,198.43

				NPV	$ -11,423.57

Year	Cost	Benefits	Total	DF	PV	DV Benefit	DV costs
0	$ -10,000.00	$ -	$ -10,000.00	1	$ -10,000.00	$ -	$ -10,000.00
1	$ -1,000.00	$ 5,000.00	$ 4,000.00	0.900901	$ 3,603.60	$ 4,504.50	$ -900.90
2	$ -1,000.00	$ 5,000.00	$ 4,000.00	0.811622	$ 3,246.49	$ 4,058.11	$ -811.62
3	$ -2,000.00	$ 6,000.00	$ 4,000.00	0.731191	$ 2,924.77	$ 4,387.15	$ -1,462.38
4	$ -20,000.00	$ 3,000.00	$ -17,000.00	0.658731	$ -11,198.43	$ 1,976.19	$ -13,174.62

				NPV	$ -11,423.57	$ 14,925.96	$ 26,349.53

						Ratio	0.566460213
						Net benefits cost ratio	-0.43353979

jeff jeffy answered 3 years ago

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