Assuming that the NPV will become 0 at 6% discount rate we can calculate the value of Q, for this we can use the goal seek function on excel:
Using it we get Q = 4517.05 and following schedule shows that NPV = 0
Year | CF | Discount Factor | Discounted CF | ||
0 | $ -4,517.05 | 1/(1+0.06)^0= | 1 | 1*-4517.0520365773= | $ -4,517.05 |
1 | $ -81,306.94 | 1/(1+0.06)^1= | 0.943396226 | 0.943396226415094*-81306.9366583913= | $ -76,704.66 |
2 | $ -1,12,926.30 | 1/(1+0.06)^2= | 0.88999644 | 0.88999644001424*-112926.300914432= | $ -1,00,504.01 |
3 | $ 25,000.00 | 1/(1+0.06)^3= | 0.839619283 | 0.839619283032302*25000= | $ 20,990.48 |
4 | $ 85,000.00 | 1/(1+0.06)^4= | 0.792093663 | 0.79209366323802*85000= | $ 67,327.96 |
5 | $ 1,25,000.00 | 1/(1+0.06)^5= | 0.747258173 | 0.747258172866057*125000= | $ 93,407.27 |
NPV = Sum of all Discounted CF | $ - |
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