1 PV and NPV - Exercise 2 3 Below are multiple scenarios where each company needs assistance to calculate the Present Value, Net Present 4 Value, and Payback Period. 5 7 8 19 10 11 12 13 14 15 16 17 18 19 2 23 24 25 27 19 50 tob. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the 21 PV formula in Excel, what is the present value of that money at three different discount rates shown below? Note: Your final answers should be displayed as a positive number. $ 31 Required a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula in Excel, what is the present value of that money at three different discount rates shown below? Note: Your final answers should be displayed as a positive number. 15 Future value to be receive $ Future date received 26 37 Discount Rate 10% 14% 20% Annual Cash Receipt Number of Years 10,000 Discount Rate 10% 14% 20% 2 years Present Value ? ? ? 5,000 5 years 13 2c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note: Estimate the payback period to the nearest year. Discount Rate 12% Present Value ?
1 PV and NPV - Exercise 2 3 Below are multiple scenarios where each company needs assistance to calculate the Present Value, Net Present 4 Value, and Payback Period. 5 7 8 19 10 11 12 13 14 15 16 17 18 19 2 23 24 25 27 19 50 tob. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the 21 PV formula in Excel, what is the present value of that money at three different discount rates shown below? Note: Your final answers should be displayed as a positive number. $ 31 Required a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula in Excel, what is the present value of that money at three different discount rates shown below? Note: Your final answers should be displayed as a positive number. 15 Future value to be receive $ Future date received 26 37 Discount Rate 10% 14% 20% Annual Cash Receipt Number of Years 10,000 Discount Rate 10% 14% 20% 2 years Present Value ? ? ? 5,000 5 years 13 2c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note: Estimate the payback period to the nearest year. Discount Rate 12% Present Value ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
|
c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. |
|||||||
|
It expects the cash in-flow |
|||||||
|
below, help determine the Total Net Cash Flows, the |
|||||||
|
Note: Estimate the payback period to the nearest year. |
|||||||
|
Discount Rate |
12% |
||||||
|
Investment Project |
Cash Flow |
Total Net Cash Flow |
|||||
|
Initial Investment |
$ (5,000) |
? |
|||||
|
Year 1 |
$ 800 |
? |
|||||
|
Year 2 |
$ 900 |
? |
|||||
|
Year 3 |
$ 1,500 |
? |
|||||
|
Year 4 |
$ 1,800 |
? |
|||||
|
Year 5 |
$ 3,200 |
? |
|||||
|
NPV of investment |
? |
||||||
|
Estimated Payback Period |
|
![File
E
Paste
L48
Home
35
36
37
Cut
Copy
Format Painter
Clipboard
Insert Page Layout Formulas Data Review View
X
A
B
1 PV and NPV - Exercise
Arial
B I U
Discount Rate
10%
14%
20%
fox
Future value to be receive $
Future date received
Discount Rate
10%
14%
20%
Font
Annual Cash Receipt
Number of Years
Discount Rate
14 A A
с
10,000
Help
ab Wrap Text
===€*Merge & Center ▾
2 years
Present Value
?
?
?
2
3 Below are multiple scenarios where each company needs assistance to calculate the Present Value, Net Present
4 Value, and Payback Period.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
5,000
Required
a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula
in Excel, what is the present value of that money at three different discount rates shown below?
Note: Your final answers should be displayed as a positive number.
D
5 years
Present Value
?
?
?
Alignment
E
12%
Tell me what you want to do
G
General
$ % 9
b. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the
PV formula in Excel, what is the present value of that money at three different discount rates shown below?
Note: Your final answers should be displayed as a positive number.
$
F
Number
€0.00
G
c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications.
It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information
below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period.
Note: Estimate the payback period to the nearest year.
EdmondsFMAC9e_PV-and-NPV_Student (3) - Excel
Percent 2
Conditional Format as Calculation
Formatting Table
H
I
J
K
L
Normal
Check Cell
M
N
Good
Explanatory... Input
Bad
Styles
0
Q
R
S
Neutral
Linked Cell
T
U
Insert Delete Format
V
Cells
←
W
X
Rehman, Nazeer [C]
Σ AutoSum •
✔Fill
✓Clear
Y
AT
Sort & Find &
Filter Select
Editing
Z
AA
AB
AC
at
Share
AD](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbce6a0cf-373b-4a7a-ae65-e94348138195%2Fd0f99ccb-d559-44e4-a101-70329416a9f1%2Fpk1za22_processed.png&w=3840&q=75)
Transcribed Image Text:File
E
Paste
L48
Home
35
36
37
Cut
Copy
Format Painter
Clipboard
Insert Page Layout Formulas Data Review View
X
A
B
1 PV and NPV - Exercise
Arial
B I U
Discount Rate
10%
14%
20%
fox
Future value to be receive $
Future date received
Discount Rate
10%
14%
20%
Font
Annual Cash Receipt
Number of Years
Discount Rate
14 A A
с
10,000
Help
ab Wrap Text
===€*Merge & Center ▾
2 years
Present Value
?
?
?
2
3 Below are multiple scenarios where each company needs assistance to calculate the Present Value, Net Present
4 Value, and Payback Period.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
5,000
Required
a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula
in Excel, what is the present value of that money at three different discount rates shown below?
Note: Your final answers should be displayed as a positive number.
D
5 years
Present Value
?
?
?
Alignment
E
12%
Tell me what you want to do
G
General
$ % 9
b. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the
PV formula in Excel, what is the present value of that money at three different discount rates shown below?
Note: Your final answers should be displayed as a positive number.
$
F
Number
€0.00
G
c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications.
It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information
below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period.
Note: Estimate the payback period to the nearest year.
EdmondsFMAC9e_PV-and-NPV_Student (3) - Excel
Percent 2
Conditional Format as Calculation
Formatting Table
H
I
J
K
L
Normal
Check Cell
M
N
Good
Explanatory... Input
Bad
Styles
0
Q
R
S
Neutral
Linked Cell
T
U
Insert Delete Format
V
Cells
←
W
X
Rehman, Nazeer [C]
Σ AutoSum •
✔Fill
✓Clear
Y
AT
Sort & Find &
Filter Select
Editing
Z
AA
AB
AC
at
Share
AD
![!
Required information
[The following information applies to the questions displayed below.]
This Applying Excel worksheet includes an explanation of the Present Value (PV) and Net Present Value (NPV) formulas.
Use the PV and NPV formulas in Excel to solve for the three scenarios in the spreadsheet. After completing all three requirements, verify the amounts from each scenario below.
For Scenario A:
Discount
Rate
10%
Check your formula setup by changing the "Future date received" to 5 years instead of 2 years, while keeping all other data the same from the original example. If working properly, at a Discount Rate of 10%, the
Present Value should now be $6,209.21.
For Scenario B:
Discount
Present Value
$8,264.46
Rate
10%
Present Value
$18,953.93
Check your formula setup by changing the "Annual Cash Receipt" to $7,500 instead of $5,000 years, while keeping all other data the same from the original example. If working properly, at a Discount Rate of 10%, the
Present Value should now be $28,430.90.
For Scenario C:
NPV of Investment
$459.13
Check your formula setup by changing the "Initial Investment" to ($8,000) instead of ($5,000), while keeping all other data the same from the original example. If working properly, the Net Present Value should now be
($2,540.87).
Hint: For Scenario C, the Net Present Value includes the total NPV of all cash flows received in Years 1 through 5, plus the cost of the initial investment to determine the final total NPV of the investment.
If you did not get any of these answers, reset the values indicated in the scenarios above and review your formulas based
what you learned in the Tutorial tab.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbce6a0cf-373b-4a7a-ae65-e94348138195%2Fd0f99ccb-d559-44e4-a101-70329416a9f1%2Fhwo7i4_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
This Applying Excel worksheet includes an explanation of the Present Value (PV) and Net Present Value (NPV) formulas.
Use the PV and NPV formulas in Excel to solve for the three scenarios in the spreadsheet. After completing all three requirements, verify the amounts from each scenario below.
For Scenario A:
Discount
Rate
10%
Check your formula setup by changing the "Future date received" to 5 years instead of 2 years, while keeping all other data the same from the original example. If working properly, at a Discount Rate of 10%, the
Present Value should now be $6,209.21.
For Scenario B:
Discount
Present Value
$8,264.46
Rate
10%
Present Value
$18,953.93
Check your formula setup by changing the "Annual Cash Receipt" to $7,500 instead of $5,000 years, while keeping all other data the same from the original example. If working properly, at a Discount Rate of 10%, the
Present Value should now be $28,430.90.
For Scenario C:
NPV of Investment
$459.13
Check your formula setup by changing the "Initial Investment" to ($8,000) instead of ($5,000), while keeping all other data the same from the original example. If working properly, the Net Present Value should now be
($2,540.87).
Hint: For Scenario C, the Net Present Value includes the total NPV of all cash flows received in Years 1 through 5, plus the cost of the initial investment to determine the final total NPV of the investment.
If you did not get any of these answers, reset the values indicated in the scenarios above and review your formulas based
what you learned in the Tutorial tab.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education