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NPV A project has annual cash flows of $6,000 for the next 10 years and then...

NPV A project has annual cash flows of $6,000 for the next 10 years and then \$7,000 each year for the following Years. The of this 20-year project is 13.17\% . If the 12%, what is the project's NPV your answer to the nearest cent

no initial cash flow

Solutions

Expert Solution

Calculation of Project's NPV

Year Cashflows Discount Rate @10% Discounted Cashflows Discount Rate @10% Discounted Cashflows
A B C = 1/(1+12%)^n D = B*C E = 1/(1+13.17%)^n F = B*E
1 6000 0.892857143 5357.142857 0.883626403 5301.758417
2 6000 0.797193878 4783.163265 0.78079562 4684.773718
3 6000 0.711780248 4270.681487 0.689931625 4139.589748
4 6000 0.635518078 3813.10847 0.6096418 3657.850798
5 6000 0.567426856 3404.561134 0.53869559 3232.173542
6 6000 0.506631121 3039.786727 0.476005647 2856.03388
7 6000 0.452349215 2714.095292 0.420611157 2523.666944
8 6000 0.403883228 2423.299368 0.371663124 2229.978743
9 6000 0.360610025 2163.66015 0.328411349 1970.468095
10 6000 0.321973237 1931.83942 0.290192939 1741.157635
11 7000 0.287476104 2012.332729 0.256422143 1794.955
12 7000 0.256675093 1796.725651 0.226581376 1586.06963
13 7000 0.22917419 1604.219331 0.200213286 1401.493002
14 7000 0.204619813 1432.338688 0.176913746 1238.39622
15 7000 0.182696261 1278.873829 0.156325657 1094.279597
16 7000 0.163121662 1141.851633 0.138133478 966.9343437
17 7000 0.145644341 1019.510387 0.122058388 854.4087158
18 7000 0.13003959 910.2771308 0.107854014 754.9781
19 7000 0.116106777 812.7474382 0.095302655 667.1185827
20 7000 0.103666765 725.6673556 0.084211942 589.4835934
NPV of the Project 46635.88234 43285.5683

NPV of the Project at 12% discount rate is $46,635.88

NPV of the Project at 13.17% discount rate is $43,285.57


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