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?

Homework Answers

Answer #1
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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