Solve A, B, C
FOR B- find annual rate of return for this investment. (round 2 decimal places)
Homework Answers
Hello,
A)
| Years | Annual CF | Cumulative CF |
| 0 | -1,04,100 | |
| 1 | 44,300 | -59,800 |
| 2 | 39,700 | -20,100 |
| 3 | 34,600 | 14,500 |
| 4 | 30,300 | 44,800 |
| 5 | 24,700 | 69,500 |
| 20100/34600 | 0.58 | |
| Add : | 2 years | |
| Pay back period | 2.58 years |
B)
| Annual net income | |
| 0 | |
| 1 | 9600 |
| 2 | 12900 |
| 3 | 12500 |
| 4 | 18600 |
| 5 | 15900 |
| 69500 | |
| Life of project | 5 years |
| Average annual net income | 13900 |
| Initial investment | 104100 |
| Annual rate of return | 13.35% |
C)
| Annual CF | PV @ 11% | PV of cash flows | |
| 0 | -1,04,100 | 1 | -104100 |
| 1 | 44,300 | 0.900900901 | 39909.90991 |
| 2 | 39,700 | 0.811622433 | 32221.4106 |
| 3 | 34,600 | 0.731191381 | 25299.22179 |
| 4 | 30,300 | 0.658730974 | 19959.54852 |
| 5 | 24,700 | 0.593451328 | 14658.2478 |
| NPV | 27948.33862 | ||
| NPV | 27,948 |
Thanks!
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