Question

ManBearPig TV project has annual cash flows of $8000 for the next 8 years and then $12,000 each year for the following 5 years. The IRR of this 13-year project is 14%. If the firm's WACC is 12%, what is the project's NPV?

Answer 1

Year	Discounting Factor [1/(1.13^year)]	Cash Flow	PV of Cash Flows (cash flow*discounting factor)
1	0.884955752	8000	7079.646018
2	0.783146683	8000	6265.173467
3	0.693050162	8000	5544.401298
4	0.613318728	8000	4906.549821
5	0.542759936	8000	4342.079488
6	0.480318527	8000	3842.548219
7	0.425060644	8000	3400.48515
8	0.376159862	8000	3009.278894
9	0.332884833	12000	3994.618001
10	0.294588348	12000	3535.060178
11	0.260697653	12000	3128.371839
12	0.230705888	12000	2768.470654
13	0.204164502	12000	2449.97403
		Initial Investment = Sum of PVs	54266.65706

Year	Discounting Factor [1/(1.12^year)]	Cash Flow	PV of Cash Flows (cash flow*discounting factor)
0	1	-54266.6571	-54266.65706
1	0.892857143	8000	7142.857143
2	0.797193878	8000	6377.55102
3	0.711780248	8000	5694.241983
4	0.635518078	8000	5084.144627
5	0.567426856	8000	4539.414846
6	0.506631121	8000	4053.048969
7	0.452349215	8000	3618.793723
8	0.403883228	8000	3231.065824
9	0.360610025	12000	4327.3203
10	0.321973237	12000	3863.678839
11	0.287476104	12000	3449.713249
12	0.256675093	12000	3080.101115
13	0.22917419	12000	2750.090282
		NPV = Sum of PVs	2945.36486