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6. Compute the NPV for Project X with the cash flows shown below if the appropriate...

6. Compute the NPV for Project X with the cash flows shown below if the appropriate cost of capital is 8 percent.

  Time: 0 1 2 3 4 5
  Cash flow: -160 -160 0 270 245 220

  • $196.48

  • $218.52

  • $236.00

  • $544.15

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Homework Answers

Answer #1
Time: 0 1 2 3 4 5
Cash flow: -$160 -$160 $0 $270 $245 $220
Discount factor at 8%                 1      0.9259      0.8573      0.7938      0.7350      0.6806
Discounted cash flows -$160 -$148 $0 $214 $180 $150
NPV = $236.00

NPV = Sum of discounted cash flows

Discount factor formula:


Where,
i = rate of return
n = number of years

Excel formulas:

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