a) | Net Present Value at 7% | $ 4,222.87 | ||
Working: | ||||
Year | Cash Flow | Discount factor | Present value | |
a | b | c=1.07^-a | d=b*c | |
1 | $ -17,000 | 0.934579 | $ -15,887.85 | |
2 | 4,500 | 0.873439 | $ 3,930.47 | |
3 | 8,700 | 0.816298 | $ 7,101.79 | |
4 | 11,900 | 0.762895 | $ 9,078.45 | |
NPV | $ 4,222.87 | |||
b) | Net Present Value at 20% | $ -268.13 | ||
Working: | ||||
Year | Cash Flow | Discount factor | Present value | |
a | b | c=1.20^-a | d=b*c | |
1 | $ -17,000 | 0.833333 | $ -14,166.67 | |
2 | 4,500 | 0.694444 | $ 3,125.00 | |
3 | 8,700 | 0.578704 | $ 5,034.72 | |
4 | 11,900 | 0.482253 | $ 5,738.81 | |
NPV | $ -268.13 |
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