Question

(U15) value: 4.00 points A project has the following cash flows: Year نے نہ دیا Cash Flow -$16,200 6,900 8,200 6,700 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations a round your answer to the nearest whole number, e.g., 32.) NPV What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and roun your answer to 2 decimal places, e.g., 32.16.) NPV

Answer 1

Solution :

The NPV of the project at a discount rate of 0 % is = $ 5,600

The NPV of the project at a discount rate of 10 % is = $ 1,883

Please find the attached screenshots of the excel sheet containing the detailed calculation for the solution.

25.01.2020 - Microsoft Excel FILE НOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Н Statement showing calculation of Net Present value of the project @0% Discount Rate SI.No. Particulars Project Cash Flows Year PV Factor @ 0% Discounted Cash Flows of the project |(4)=(1) * (3) 1.0000 $ |(1) (2) (3) 1 Cash outflow Year 0 4 16,200.00 Total of Cash Outflows (A) 16,200.0000 2 16,200.0000 1.0000 $ 3 Cash Inflow Year 1 6,900.00 1. 6,900.0000 4 Cash Inflow Year 2 1.0000 $ 1.0000 $ 7 8,200.00 8,200.0000 5 Cash Inflow Year 3 6,700.00 6,700.0000 Total of Discounted Cash Inflows (B) Net Present Value = (B) - (A) 21,800.0000 5,600.0000 10 8 Net Present Value ( when rounded off to the nearest whole number ) $ 11 5,600 12 13 14 Statement showing calculation of Net Present value of the project @ 10 % Discount Rate Discounted Cash Flows of the project |(4)=(1) * (3) 1.0000 $ SI.No. Particulars Project Cash Flows Year PV Factor @ 10 |(2) % (3) (1) 15 1 Cash outflow Year 0 16 16,200.00 16,200.0000 Total of Cash Outflows (A) 17 16,200.0000 0.9091 $ 18 3 Cash Inflow Year 1 6,900.00 6,272.7273 4 Cash Inflow Year 2 5 Cash Inflow Year 3 0.8264 $ 19 8,200.00 6,776.8595 2. 20 6,700.00 0.7513 $ 5,033.8092 3 21 Total of Discounted Cash Inflows (B) Net Present Value = (B) - (A) 8 Net Present Value ( when rounded off to the nearest whole number ) 18,083.3959 1,883.3959 22 $ 23 1,883 24 25 26