Homework Answers
Net Present value = present value of cash inflows – present value of cash outflows
Present value of cash inflows at the end of year 4 = 60*PVAF(13%, 10 years)
= 60*5.4262
= $325.572
Present value of cash inflows today = 325.572*PVF(13%, 4 years)
= 325.572*0.6133
= $199.67
NPV = 199.67 – 250
= -$50.33
Hence, the answer is d. ($50.32)
Net Present value = present value of cash inflows – present value of cash outflows
Present value of cash inflows at the end of year 4 = 60*PVAF(13%, 10 years)
= 60*5.4262
= $325.572
Present value of cash inflows today = 325.572*PVF(13%, 4 years)
= 325.572*0.6133
= $199.67
NPV = 199.67 – 250
= -$50.33
Hence, the answer is d. ($50.32)
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