Question
In: Finance
In the following exercise, calculate the net present value (NPV) at a required return of 15...
In the following exercise, calculate the net present value (NPV) at a required return of 15 percent.
Year Cash Flow
0 -$1,000 (initial investment)
1 95
2 55
Present value = (Future value) / (1+rate)^2 .
Solutions
Expert Solution
Ans NPV = -$875.80
| Year | Project Cash Flows (i) | DF@ 15% | DF@ 15% (ii) | PV of Project ( (i) * (ii) ) |
| 0 | -1000 | 1 | 1 | (1,000.00) |
| 1 | 95 | 1/((1+15%)^1) | 0.869565 | 82.61 |
| 2 | 55 | 1/((1+15%)^2) | 0.756144 | 41.59 |
| NPV | (875.80) | |||
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