Question
In: Finance
You are given three investment alternatives to analyze. The cash flows from these three investments are...
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
End of Year A B C
1 $1,000 $3,000 $5,000
2 2,000 3,000 5,000
3 3,000 3,000 (5,000)
4 -4,000 3,000 (5,000)
5 4,000 6,000 15,000
What is the present value of each of these three investments if the appropriate discount rate is 15 percent?
Solutions
Expert Solution
Project A
Net present value is solved using a financial calculator. The steps to solve on the financial calculator:
- Press the CF button.
- CF0= $0.
- Cash flow for all the years should be entered.
- Press Enter and down arrow after inputting each cash flow.
- After entering the last cash flow, press the NPV button and enter the discount rate of 15%.
- Press the down arrow and CPT buttons to get the net present value.
Net Present value of cash flows at 15% discount rate is $4,056.10.
Project B
Net present value is solved using a financial calculator. The steps to solve on the financial calculator:
- Press the CF button.
- CF0= $0.
- Cash flow for all the years should be entered.
- Press Enter and down arrow after inputting each cash flow.
- After entering the last cash flow, press the NPV button and enter the discount rate of 15%.
- Press the down arrow and CPT buttons to get the net present value.
Net Present value of cash flows at 15% discount rate is
$11,547.9945
$11,548.
Project C
Net present value is solved using a financial calculator. The steps to solve on the financial calculator:
- Press the CF button.
- CF0= $0.
- Cash flow for all the years should be entered.
- Press Enter and down arrow after inputting each cash flow.
- After entering the last cash flow, press the NPV button and enter the discount rate of 15%.
- Press the down arrow and CPT buttons to get the net present value.
Net Present value of cash flows at 15% discount rate is $9,439.85.
In case of any query, kindly comment on the solution.
jeff jeffy answered 9 months agoRelated Solutions
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1
$
2 comma 0002,000
$
3 comma 0003,000
$
4 comma 0004,000
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3 comma 0003,000
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$
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A
B
C
1
10,000
10,000
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10,000
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10,000
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10,000
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10,000
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6,000
4,000
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