Part A:
NPV = PV of Cash Inflows - PV of Cash Outflows
Year | CF | PVF @10% | Disc CF |
0 | $ -9,000.00 | 1.0000 | $ -9,000.00 |
1 | $ 2,750.00 | 0.9091 | $ 2,500.00 |
2 | $ 2,750.00 | 0.8264 | $ 2,272.73 |
3 | $ 2,750.00 | 0.7513 | $ 2,066.12 |
4 | $ 2,750.00 | 0.6830 | $ 1,878.29 |
5 | $ 2,750.00 | 0.6209 | $ 1,707.53 |
6 | $ 2,750.00 | 0.5645 | $ 1,552.30 |
7 | $ 2,750.00 | 0.5132 | $ 1,411.18 |
8 | $ 2,750.00 | 0.4665 | $ 1,282.90 |
9 | $ 2,750.00 | 0.4241 | $ 1,166.27 |
NPV | $ 6,837.32 |
Part B:
NPV = PV of Cash Inflows - PV of Cash Outflows
Year | CF | PVF @29% | Disc CF |
0 | $ -9,000.00 | 1.0000 | $ -9,000.00 |
1 | $ 2,750.00 | 0.7752 | $ 2,131.78 |
2 | $ 2,750.00 | 0.6009 | $ 1,652.54 |
3 | $ 2,750.00 | 0.4658 | $ 1,281.04 |
4 | $ 2,750.00 | 0.3611 | $ 993.06 |
5 | $ 2,750.00 | 0.2799 | $ 769.81 |
6 | $ 2,750.00 | 0.2170 | $ 596.75 |
7 | $ 2,750.00 | 0.1682 | $ 462.60 |
8 | $ 2,750.00 | 0.1304 | $ 358.60 |
9 | $ 2,750.00 | 0.1011 | $ 277.99 |
NPV | $ -475.82 |
Part C:
IRR is the Rate at which PV of Cash Inflows are equal to PV of cash Outflows
Year | CF | PVF @27% | Disc CF |
0 | $ -9,000.00 | 1.0000 | $ -9,000.00 |
1 | $ 2,750.00 | 0.7874 | $ 2,165.35 |
2 | $ 2,750.00 | 0.6200 | $ 1,705.00 |
3 | $ 2,750.00 | 0.4882 | $ 1,342.52 |
4 | $ 2,750.00 | 0.3844 | $ 1,057.10 |
5 | $ 2,750.00 | 0.3027 | $ 832.37 |
6 | $ 2,750.00 | 0.2383 | $ 655.41 |
7 | $ 2,750.00 | 0.1877 | $ 516.07 |
8 | $ 2,750.00 | 0.1478 | $ 406.35 |
9 | $ 2,750.00 | 0.1164 | $ 319.82 |
NPV | $ -0.00 |
indiffrent DIsc rate is 27%
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