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A construction project has the following data: initial disbursement $ 400,000. The required rate of return...

A construction project has the following data: initial disbursement $ 400,000. The required rate of return is 9% per year. Net cash income for the following years:

1st. year $ 87,000 =

2nd. years $ 106,500 =

3rd. years $ 192,000 =

4th. years $ 184,800 =

5th. years $ 184,800 =

Net Present Value _____________

Determine the payback present value _______

Expert Solution

Year	Cash Flow	Present Value Factor at 9%	Present Value of Cash flow	Cumulative Present Value of cash flow
0	(400,000)	1.00	(400,000.00)	(400,000.00)
1	87,000	0.91743119	79,816.51	(320,183.49)
2	106,500	0.84167999	89,638.92	(230,544.57)
3	192,000	0.77218348	148,259.23	(82,285.34)
4	184,800	0.70842521	130,916.98	48,631.64
5	184,800	0.64993139	120,107.32	168,738.96
Total Or NPV			168,738.96

PBPV is Payback present value .

Therefore,

Excel formula:

Present value factor formula, if not using excel:

Where,
i = rate of return
n = number of years

jeff jeffy answered 1 year ago

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