Self-Assessment HW6B (NPV)

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Finance

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Nov 24, 2024

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Question 1 Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 11.27 percent. The initial outlay is $511,874. Year 1: 180,696 Year 2: 150,117 Year 3: 198,752 Year 4: 147,371 Year 5: 169,563 Round the answer to two decimal places. Your Answer: 111589.77] Answer W Hide Check my answer Step 1: Calculate present value of cash flows received in years 1-5 using Excel function NPV. (Formulas - Financial - NPV) Enter: Rate 11.27% Value1 180696 Value2 150117 Value 3 198752 Value 4 147371 Value 5 169563 =NPV(11.27%,180696,150117, 198752,147371,169563) = $623,463.77 Step 2: Calculate NPV of the project: $623.463.77 - $511,874 = $111,589.77 Al together: =NPV(11.27%,180696,150117, 198752,147371,169563) - 511,874 = $111,589.77
File Home Insert Page Layout Formulas Data Review View Add-ir A X B E g @8t < Insert AutoSum Recently Financial Logical Text Date& Lookup& Math & More Function < Used ~ = < v Time~ Reference~ Trig~ Functions~ | Mani Function Library Al - £ =NPV(11.27%,180696,150117,198752,147371,169563) < B R N B N ) File Home Insert Page Layout Formulas Data Review View Add-ins He ] Qo D3 S B | G Insert AutoSum Recently Financial Logical Text Date& Lookup& Math& More Name " Function - Usedv v ~ ~ Time~ Reference~ Tig~ Functions~ | Manager B5C Function Library Defil Al - £ =NPV/(11.27%,180696,150117,198752,147371,169563)-511874 c D E | F | &6 H I Question 2 Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company’s project, assuming the company’s cost of capital is 14.90 percent. The initial outlay for the project is $355.970. The project will produce the following after-tax cash inflows of Year 1: 170,583 Year 2: 11,468 Year 3: 74,099 Year 4: 199,276 Round the answer to two decimal places. Your Answer: 638.82 Answer
Step 1: Calculate present value of cash flows received in years 1-4 using Excel function NPV. (Formulas - Financial - NPV) Enter: Rate 14.90% Value1 170583 Value2 11468 Value 374099 Valued 199276 =NPV(14.9%,170583,11468, 74099,199276) = $320,331.18 Step 2: Calculate NPV of the project: $320,331.18 - $355,970 = -$35,638.82 Al together: =NPV(14.9%,170583,11468,74099,199276) - 355970 = -$35,638.82 File Home Insert Page Layout Formulas Data Review View AKX B E @A AQ g O Insert AutoSum Recently Financial Logical Text Date& Lookup & Math & More Function v Used v v v v Timev Reference~ Trig~ Functions Function Library Al v e =NPV/(14.9%,170583,11468,74099,199276) A A B © D E F G H 1 [$320331.18 | 2 File Home Insert Page Layout Formulas Data Review View A A2 W E R AQ I Insert ~ AutoSum Recently Financial Logical Text Date& Lookup & Math & More Function v Used v v v v Time~ Reference~v Trigv Functions~ Function Library Al b fe =NPV(14.9%,170583,11468,74099,199276)-355970 4 A B c D E F G H 1 | ($35,638.82)] 2
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Question 3 Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping’s cost of capital is 8.11 percent. What is the NPV of a project if the initial costs are $1,568,909 and the project life is estimated as 5 years? The project will produce the same after-tax cash inflows of $581,897 per year at the end of the year. Round the answer to two decimal places. Your Answer: 74771674 Answer W Hide Check my answer Step 1: Calculate present value of cash flows received in years 1-5 using Excel function PV. (Formulas - Financial - PV) Enter: Rate 8.11% Nper 5 Pmt 581897 FV 0 Type 0 =PV(8.11%,5,581897.0) = $2,316,625.74 (the answer appears in Excel as a negative number) Step 2: Calculate NPV of the project: $2,316,625.74 - $1,568,909 = $747,716.74 File Home Insert Page Layout Formulas Data Rer I3 g Insert AutoSum Recently Financial Logical Text Date& Lookup& Mz Function < Used v < < v Time~ Reference~ Tr Function Library A1 M fe || =PV(8.11%,5,581897,0,0) A A B C D E F 1Sz,316,625.74jl 1 2
Question 4 Aproject has an initial outlay of $1,545. It has a single payoff at the end of year 9 of $9,356. What is the net present value (NPV) of the project if the company’s cost of capital is 8.29 percent? Round the answer to two decimal places. Your Answer: 3023.73 Answer W Hide Check my answer Step 1: Calculate present value of cash flow received at the end of year 9 using Excel function PV. (Formulas - Financial - PV) Enter: Rate 8.29% Nper 9 Pmt 0 FV 9356 Type 0 =PV(8.29%.9.0,9356,0) = $4,568.73 (the answer appears in Excel as a negative number) Step 2: Calculate NPV of the project: $4,568.73 - 1,545 = $3,023.73 File Home Insert Page Layout Formulas Data 2D Insert AutoSum Recently Financial Logical Text Date& Lookup & Function > Used ~ > > v Time~ Reference Function Library A1 M fo || =PV(8.29%,9,0,9356,0) 4 A B c D E F 1 (54,563.7311
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