Question

Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Project C/F C/F C/F C/F C/F C/F C/F C/F Alpha - 79 20 25 30 35 40 NA N/A Beta -80 25 25 25 25 25 25 25 Discount Rate 14% 15% The net present value (NPV) for project beta is closest to:

Answer 1

NPV =PV of Inflows -Initial Outflow

For Project Beta the discount rate is gven as 15%

The NPV can be computed using the excel function=NPV()

The formula used =NPV(15%,B3:B9)+B2 We get the NPV as 24.01

BS Book1 - Excel (Product Activation Failed) o X File Home Insert Page Layout Formulas Data Review View Developer Tell me what you want to do... ie * Cut Calibri 11 - A A pe Wrap Text Currency WE L Insert Delete Format Copy Format Painter Sign in & Share AutoSum - Fill - Sort & Find & Clear Filter - Select Editing Paste BIU A € Merge & Center $ - % +0.00 .00 5.0 Conditional Format as Cell Formatting Table Styles Styles Clipboard Font Alignment Number Cells B10 : fi =NPV(15%,B3:39)+B2 A B с D E F G H 1 J K L M N o P Q R Cash flow 1 Years 2 Year 0 3 Year 1 -80 25.00 25.00 25.00 25.00 4 Year 2 5 Year 3 6 Year 4 7 Year 5 8 Year 6 9 Year 7 10 NPV 25.00 25.00 25.00 $24.01 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Sheet1 Sheet2 + Ready 1 + 100%