Question

Question 2 10 pts Compute the net present worth (NPW) of the cash flows described in table below for investment being considered by MGM Industries in Georgia. MARR-6% Year 1-10 11-15 16-25 26-30 Cash Flow -$200K10K 20K 5K 30K

Compute the net present worth (NPW) of the cash flows described in table below for investment being considered by MGM Industries in Georgia. MARR =6%

Answer 1

ANSWER:

Since the calculations are very long, i have solved in excel.

year	0	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30
cash flows	-200,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000	20,000	20,000	20,000	20,000	20,000	-5,000	-5,000	-5,000	-5,000	-5,000	-5,000	-5,000	-5,000	-5,000	-5,000	30,000	30,000	30,000	30,000	30,000
net present worth	-65,267

in excel use the npv function.

=npv(rate,cash flows from year 1 to year 30) + (cash flow in year 0)

=npv(6%,10000,10000,10000,10000,10000,10000,10000,10000,10000,10000,20000,20000,20000,20000,20000,-5000,-5000,-5000,-5000,-5000,-5000,-5000,-5000,-5000,-5000,30000,30000,30000,30000,30000) + (-200000)

=-65,267