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# The Following Table Applies to Questions 20 through Question 27. Project R and S are m...

The Following Table Applies to Questions 20 through Question 27. Project R and S are m utually exclusive projects, Project R and S and their cost of capital (or discount rate) is 11%. What is the NPV for project R? Year Project R Project S 0 -\$100,000 -\$200,000 1 40,000 200,000 2 40,000 50,000 3 40,000 40,000 4 40,000 30,000 5 40,000 10,000 \$47,835.88 \$75,705.40 \$27,869.52 \$100,000

#### Homework Answers

Answer #1
 Project Discount rate 11.000% Year 0 1 2 3 4 5 Cash flow stream -100000 40000 40000 40000 40000 40000 Discounting factor 1.000 1.110 1.232 1.368 1.518 1.685 Discounted cash flows project -100000.000 36036.036 32464.897 29247.655 26349.239 23738.053 NPV = Sum of discounted cash flows NPV Project = 47835.88 Where Discounting factor = (1 + discount rate)^(Corresponding period in years) Discounted Cashflow= Cash flow stream/discounting factor
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