Question

a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 11 percent(Do not round intermediate calculations and round your answer to 2 decimal places, e.g. , 32.16.) c. What is the NPV at a discount rate of 21 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places , e.g., 32.16 .) d. What is the NPV at a discount rate of 31 percent ? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places , e.g.,32.16.) )

Consider the following cash flows: Year Cash Flow $32,500 14,300 17,400 11,700 a. What is the NPV at a discount rate of zero percent? (Do not round intermediat calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount rate of 21 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV at a discount rate of 31 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Net present value Net present value Net present value d. Net present value c.

Answer 1

NPV = Present value of all cash inflows - Present value of cash outflow or initial cash outflow

NPV = {CF1 * PVF(r%, 1 year) + CF2 * PVF(r%, 2 years) + ..........+CFn * PVF(r%, n years)} - Initial Cash outflow

a. NPV @ 0%

Year	Cash Flow	PVF @ 0%	P.V.
0	(32,500.00)	1	(32,500.00)
1	14,300.00	1	14,300.00
2	17,400.00	1	17,400.00
3	11,700.00	1	11,700.00
		NPV	10,900.00

b. NPV @ 11%

Year	Cash Flow	PVF @ 11%	P.V.
0	(32,500.00)	1	(32,500.00)
1	14,300.00	0.900900901	12,882.88
2	17,400.00	0.811622433	14,122.23
3	11,700.00	0.731191381	8,554.94
		NPV	3,060.05

c. NPV @ 21%

Year	Cash Flow	PVF @ 21%	P.V.
0	(32,500.00)	1	(32,500.00)
1	14,300.00	0.82644628	11,818.18
2	17,400.00	0.68301346	11,884.43
3	11,700.00	0.56447393	6,604.34
		NPV	(2,193.04)

d. NPV @ 31%

Year	Cash Flow	PVF @ 31%	P.V.
0	(32,500.00)	1	(32,500.00)
1	14,300.00	0.76335878	10,916.03
2	17,400.00	0.58271662	10,139.27
3	11,700.00	0.44482185	5,204.42
		NPV	(6,240.28)

A. NPV = +10,900

B. NPV = +3060.05

C. NPV = -2193.04

D. NPV = -6240.28