Question

Provide the missing information for the following projects using the present value of an annuity function [time value of money (TVM) keys rather than the cash flow (CF) function keys]. (Hint: The present value of the annuity of the annual cash flows minus the initial outlay must equal the NPV. For example, for Project A, calculate the present value of five $35,000 cash inflows and subtract the initial outlay (Co) to get the project's NPV.) Inltlal Outlay (CO) Length (In years) Annual Cost of Project Cash Flow Capltal NPV $100,000 200,000 300,000 $35,000 A 8% ? $35,000 15,000 20,000 25,000 4 ? 13 C 7 50,000 ? 400,000 56,098 75,000 D ? E ? 6 10

Answer 1

1. NPV= $39,744.85
2. Annual cash flow = $79,005
3. Rate =2.705%
4. 13 years
5. Initial outlay = $301645.

NPV = - presentvalue of all inflows Present value of all out flows present value tuture value (avo (1+ where - cost of capital no no. of years. 4. Annual cash flows. project A - lov,ovo NPV= 35 ovo (1 +0.08) 0=) = 39, 744.85 project is a. let Annual cash flow 4 35 Choisya - 2000 ** ( g mig 5 * 15Y)-200m 35,000 = x (9.9 7447) - 2000vo a = 74,000 (approx) = 79,005. 63 639 (exact) project (: 50,000 15,000 -300 OJO (1+r)" 8= 2.705%

let in no. of leti- no. of years. project o!- 3.o - 3 20,000 = shop 56,098 (1.09) - 40D, JOD. to, co = 20,to - 400 ovo 1-09 1.092 in 13 years. Extrao- project E- let p= Prital outlay 25000 75,000 (1+0 ) n=1 25oo - - 75.00 (0:01 * ctosz + toba tuta ) - P v tu ) 7 (1) (1-1) 4 (1-D 3 t (1-1 (1-12 25,000tooo ( 4035596)-P P= 3,01,645