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    Deb226's Avatar
    Deb226 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Aug 6, 2007, 10:59 PM
    Calculating NPV.formula is difficult!
    I need help with the spreadsheet below. I need to use present value analysis to discount the cash flows and also need to determine if the project is a net positive or negative impact on the firm, NPV. Calculate the certainty equivalent cash flows and NPV.

    I am not quite sure how to calculate this, the equation is very confusing... my next class is Thursday night but the assignment is due Friday--any help would be appreciated.

    Spreadsheet:

    Year 2005 2006 2007 2008 2009 2009
    T = 0 1 2 3 4 5

    Risk Free 2.25% 2.50% 2.75% 3.00% 3.25% 3.25%
    Rate
    Cost of Capital 6.00% 7.00% 8.00% 9.00% 10.00% 11.00%

    (US$ millions, incremental)
    Net Sales 30 35 40 45 50
    Selling, General (20) (18) (15) (12) (12)
    & Admin.
    Depreciation (10) (10) (10) (10) (10)
    Interest Expense (2) (2) (2) (2) (2)
    Income Before Taxes (2) 5 13 21 26
    Income Taxes 1 (2) (5) (8) (10)
    Net Income (1) 3 8 13 16
    Capital Investment (50)
    Addback Noncash 10 10 10 10 10
    Cash Flow (50) 8.76 13.10 18.06 23.02 26.12
    markiss16's Avatar
    markiss16 Posts: 1, Reputation: 1
    New Member
    		  
    #2

    Jun 23, 2008, 09:18 PM
    need help with the spreadsheet below. I need to use present value analysis to discount the cash flows and also need to determine if the project is a net positive or negative impact on the firm, NPV. Calculate the certainty equivalent cash flows and NPV.

    I am not quite sure how to calculate this, the equation is very confusing... my next class is Thursday night but the assignment is due Friday--any help would be appreciated.

    Spreadsheet:

    Year 2005 2006 2007 2008 2009 2009
    T = 0 1 2 3 4 5

    Risk Free 2.25% 2.50% 2.75% 3.00% 3.25% 3.25%
    Rate
    Cost of Capital 6.00% 7.00% 8.00% 9.00% 10.00% 11.00%

    (US$ millions, incremental)
    Net Sales 30 35 40 45 50
    Selling, General (20) (18) (15) (12) (12)
    & Admin.
    Depreciation (10) (10) (10) (10) (10)
    Interest Expense (2) (2) (2) (2) (2)
    Income Before Taxes (2) 5 13 21 26
    Income Taxes 1 (2) (5) (8) (10)
    Net Income (1) 3 8 13 16
    Capital Investment (50)
    Addback Noncash 10 10 10 10 10
    Cash Flow (50) 8.76 13.10 18.06 23.02 26.12
    mbalady5's Avatar
    mbalady5 Posts: 1, Reputation: 1
    New Member
    		  
    #3

    Jun 24, 2008, 09:33 AM
    This is not as hard as it may seem. They are throwing in a bunch of junk to confuse you. To calculate the NPV think of what that means. NPV is the present value of the investment's future net cash flows minus the initial investment. If that is positive the investment should be made. You can get this answer just using the last cash flow line.

    future cash flows-initial investment
    vichet's Avatar
    vichet Posts: 1, Reputation: 1
    New Member
    		  
    #4

    Dec 11, 2010, 09:55 AM
    I want to know how to calcalate the npv of financial statement
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