Question

You are going to receive $300 at the end of each year for the next five years. The discount rate is 8%. Under the same circumstance, if you are going to receive $300 for another 5 years (10 years in total). It means your NPV will be doubled.

true or false

Answer 1

False.

Explanation by computing both the NPV has been made as under:

NPV for 5 yrs
Yeara	Cashflows	PVF at 8%	Present value
1	300	0.925926	277.7778
2	300	0.857339	257.2016
3	300	0.793832	238.1497
4	300	0.73503	220.509
5	300	0.680583	204.175
NPV for 5 yrs			1197.8
NPV for 10 years
Yeara	Cashflows	PVF at 8%	Present value
1	300	0.925926	277.7778
2	300	0.857339	257.2016
3	300	0.793832	238.1497
4	300	0.73503	220.509
5	300	0.680583	204.175
6	300	0.63017	189.0509
7	300	0.58349	175.0471
8	300	0.540269	162.0807
9	300	0.500249	150.0747
10	300	0.463193	138.958
NPV for 10 years			2013.02
As Observed, it does not get doubled