6.00% | |||
Year | Cash Flow | PV factor = 1/ (1+r)^t | PV |
0 | (80,000) | 1.000 | (80,000.00) |
1 | 48,000 | 0.943 | 45,283.02 |
2 | 36,000 | 0.890 | 32,039.87 |
3 | 22,000 | 0.840 | 18,471.62 |
4 | - | 0.792 | - |
5 | - | 0.747 | - |
NPV | 15,794.51 |
Project 2
8.00% | |||
Year | Cash Flow | PV factor = 1/ (1+r)^t | PV |
0 | (175,000) | 1.000 | (175,000.00) |
1 | 85,000 | 0.926 | 78,703.70 |
2 | 74,000 | 0.857 | 63,443.07 |
3 | 38,000 | 0.794 | 30,165.63 |
4 | 26,800 | 0.735 | 19,698.80 |
5 | 19,000 | 0.681 | 12,931.08 |
NPV | 29,942.28 |
Project 3
12.00% | |||
Year | Cash Flow | PV factor = 1/ (1+r)^t | PV |
0 | (22,700) | 1.000 | (22,700.00) |
1 | 13,000 | 0.893 | 11,607.14 |
2 | 13,000 | 0.797 | 10,363.52 |
3 | - | 0.712 | - |
4 | - | 0.636 | - |
5 | - | 0.567 | - |
NPV | (729.34) |
Ranking for projects
Project | NPV | Rank | |
1 | 15,794.51 | 2 | |
2 | 29,942.28 | 1 | |
3 | (729.34) | ||
Since NPV is highest in project 2, this should be taken up first followed by project 1. | |||
Project 3 should not be accepted as this provides negative NPV |
Preferably in excel form Part B: Calculate using Excel formulas, the NPV of each of the...
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