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Consider the following cash flows: Year Cash Flow 0 –$ 19,400 1 10,400 2 9,320 3...

Consider the following cash flows:
Year Cash Flow
0 –$ 19,400
1 10,400
2 9,320
3   6,900
a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c. What is the NPV at a discount rate of 20 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d. What is the NPV at a discount rate of 30 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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Answer #1

a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=10400+9320+6900

=26620

NPV=Present value of inflows-Present value of outflows

=26620-19400

=$7220

b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=10400/1.1+9320/1.1^2+6900/1.1^3

22341.10

NPV=Present value of inflows-Present value of outflows

=22341.10-19400

=$2941.1(Approx).

c.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=10400/1.2+9320/1.2^2+6900/1.2^3

=19131.94

NPV=Present value of inflows-Present value of outflows

=19131.94-19400

=$(268.06)(Approx).(Negative)

d.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=10400/1.3+9320/1.3^2+6900/1.3^3

=16655.44

NPV=Present value of inflows-Present value of outflows

=16655.44-19400

=$(2744.56)(Approx).(Negative)

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