[teddyola]

Period 0 1 2 3 4 5 6 7
Project
A Investment $(65,000)
Cash Flows $15,000 $19,000 $14,000 $25,000 $10,000 $9,000 $15,000

B Investment $(1,000)
Cash Flows $90 $275 $650 $500 $250 $300 $50

C Investment $(10,000)
Cash Flows $5,000 $5,000 $(3,000) $5,000 $5,000 $(3,000) $5,000

Point Value
1 4 For "A" above, calculate the Net Present Value using a 15% discount rate.

2 4 For "B" above, calculate the Net Present Value using a 12% discount rate.

3 4 For "A" above, calculate the Internal Rate of Return.

4 4 For "c" above, calculate the Internal Rate of Return.

[morgaine300]

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[sharona10]

Period
0 $(65,000)
1 $15,000
$19,000 $14,000 $25,000 $10,000 $9,000 $15,000
2
3
4
5
6
7




Cash Flows

[sharona10]

Period key factor( discounting rate) NPV (cash flows x this. Rate)
0 $(65,000) 1 (65000)
1 $15,000 0.869 13035
2 $19,000 0.756 14364
3 $14,000 0.657 9198
4 $25,000 0.571 14275
5 $10,000 0.497 4970
6 $9,000 0.432 3888
7 $15,000 0.375 5625

total npv= $355.


for the discount rate, instead of learning it by heart, you can calculate it by:
as it is mentioned that the rate is 15%,
you calculate it by: ( on your calculator you insert)

15%= 0.15
1+answer= 1.15
answer divide by 1.15=1
you just have to click on equal to, you will have the rate. (see above)





Think tha calcualtion of NPV is clear.