A project has the following cash flows: 1/1 Year Cash Flow points awarded 0 -$ 16,900 1 7,600 Scored 2 3 8,900 7,400 eBook Print 口 References a. What is the NPV at a discount rate of zero percent? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. b. What is the NPV at a discount rate of 12 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the NPV at a discount rate of 21 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the NPV at a discount rate of 28 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. NPV $ 7,000 b. NPV $ 2,247.91 c. NPV -363.08 d. NPV -2,001.78 Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation. The NPV of a project is the PV of the inflows minus the PV of the outflows. At a zero discount rate (and only at a zero discount rate), the cash flows can be added together across time. So, the NPV of the project at a zero percent required return is: NPV = $16,900 + 7,600 + 8,900 + 7,400 = $7,000 The NPV at a required return of 12 percent is:
A project has the following cash flows: 1/1 Year Cash Flow points awarded 0 -$ 16,900 1 7,600 Scored 2 3 8,900 7,400 eBook Print 口 References a. What is the NPV at a discount rate of zero percent? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. b. What is the NPV at a discount rate of 12 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the NPV at a discount rate of 21 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the NPV at a discount rate of 28 percent? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. NPV $ 7,000 b. NPV $ 2,247.91 c. NPV -363.08 d. NPV -2,001.78 Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation. The NPV of a project is the PV of the inflows minus the PV of the outflows. At a zero discount rate (and only at a zero discount rate), the cash flows can be added together across time. So, the NPV of the project at a zero percent required return is: NPV = $16,900 + 7,600 + 8,900 + 7,400 = $7,000 The NPV at a required return of 12 percent is:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
Would you kindly input this problem into Excel and use the NPV function and IRR function in Excel? Thank You
Transcribed Image Text:A project has the following cash flows:
1/1
Year
Cash Flow
points awarded
0
-$ 16,900
1
7,600
Scored
2
3
8,900
7,400
eBook
Print
口
References
a. What is the NPV at a discount rate of zero percent?
Note: Do not round intermediate calculations and round your answer to the
nearest whole number, e.g., 32.
b. What is the NPV at a discount rate of 12 percent?
Note: Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.
c. What is the NPV at a discount rate of 21 percent?
Note: A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
d. What is the NPV at a discount rate of 28 percent?
Note: A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
a. NPV
$
7,000
b. NPV
$
2,247.91
c. NPV
-363.08
d. NPV
-2,001.78
Explanation
Note: Intermediate answers are shown below as rounded, but the full answer was used
to complete the calculation.
The NPV of a project is the PV of the inflows minus the PV of the outflows. At a zero
discount rate (and only at a zero discount rate), the cash flows can be added together
across time. So, the NPV of the project at a zero percent required return is:
NPV = $16,900 + 7,600 + 8,900 + 7,400 = $7,000
The NPV at a required return of 12 percent is:
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