Question

# For the following set of cash flows. Year Cash Flow 0 -6,700 1 6,600 2 5,600...

For the following set of cash flows.

Year Cash Flow

0 -6,700

1 6,600

2 5,600

3 3,000

A) What is the NPV at a discount rate of 0 percent?

B) What is the NPV at a discount rate of 13 percent?

C) What is the NPV at a discount rate of 21 percent?

D) What is the NPV at a discount rate of 26 percent?

 Years Cash flow Discount factor Present Value Discount factor Present Value Discount factor Present Value Discount factor Present Value @0% @13% @21% @26% a b c=1.0^-a b*c d=1.13^-a b*d e=1.21^-a b*e f=1.26^-a b*f 0 \$      -6,700 1.000 \$ -6,700 1.000 \$ -6,700 1.000 \$ -6,700 1.000 \$ -6,700 1 \$        6,600 1.000 \$ 6,600 0.885 \$ 5,841 0.826 \$ 5,455 0.794 \$ 5,238 2 \$        5,600 1.000 \$ 5,600 0.783 \$ 4,386 0.683 \$ 3,825 0.630 \$ 3,527 3 \$        3,000 1.000 \$ 3,000 0.693 \$ 2,079 0.564 \$ 1,693 0.500 \$ 1,500 NPV \$ 8,500 \$ 5,605 \$ 4,273 \$ 3,565 Thus, A) NPV \$ 8,500 B) NPV \$ 5,605 C) NPV \$ 4,273 D) NPV \$ 3,565

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