Given the following cash flows and a discount rate of 13.2 percent, calculate the NPV. Year...

Question

Question

Given the following cash flows and a discount rate of 13.2 percent, calculate the NPV.

Year 0	1	2	3	4	5
-75000	25000	27500	30000	32500	35000

A. $28,381.29

B. $75,000.00

C. $57,508.83

D. $27,848.54

Answer 1

Answer #1

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

=25000/1.132+27500/1.132^2+30000/1.132^3+32500/1.132^4+35000/1.132^5

=$102848.54

NPV=Present value of inflows-Present value of outflows

=102848.54-75,000

=$27,848.54(Approx).

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Answer 2

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