Question

I need to know how to do this IN EXCEL,

please! Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable at one rate of return, it will be acceptable at all rates of return. To explain why his thinking is incorrect, you are creating an example to illustrate your point. The cash flows you are using are as follows: time zero is -$71,000, years 1 through 4 are $17,500 each, and years 5 and 6 are $22,500 each. What is net present value at a discount rate of 12 percent and 17 percent?

Answer 1

Net Present value = Present value of cash inflows - Present value of cash outflows
At 12%
Year	Cash flows	PVF	PV
0	-71000	1	-71000
1	17500	0.892857143	15625
2	17500	0.797193878	13950.89286
3	17500	0.711780248	12456.15434
4	17500	0.635518078	11121.56637
5	22500	0.567426856	12767.10425
6	22500	0.506631121	11399.20023
		NPV	6319.918046
At 17%
Year	Cash flows	PVF	PV
0	-71000	1	-71000
1	17500	0.854700855	14957.26496
2	17500	0.730513551	12783.98714
3	17500	0.624370556	10926.48474
4	17500	0.533650048	9338.875844
5	22500	0.456111152	10262.50093
6	22500	0.389838592	8771.368314
		NPV	-3959.51808