Question 4 Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000 (investment) and a positive cash flow of $100 in year 1 growing at 3.5% per year until t=10 (values are displayed with two digits after decimal point, which will lead to a small rounding error). If the discount rate attributed to the project is 8%, what is the present value of these cash flows net of the initial (t=0) investment? (Hint: While you can use multiple present value operators to discount each cash flow and then add them up, it is more efficient to use the NPV formula in Excel.) 1 2 3 Correct Answer You Answered Time 0 Cash Flow -1000.00 100.00 103.50 107.12 110.87 114.75 118.77 122.93 127.23 131.68 136.29 ($) 4573.3 -229.73 4 5 6 7 -718.3 8 9 10
Question 4 Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000 (investment) and a positive cash flow of $100 in year 1 growing at 3.5% per year until t=10 (values are displayed with two digits after decimal point, which will lead to a small rounding error). If the discount rate attributed to the project is 8%, what is the present value of these cash flows net of the initial (t=0) investment? (Hint: While you can use multiple present value operators to discount each cash flow and then add them up, it is more efficient to use the NPV formula in Excel.) 1 2 3 Correct Answer You Answered Time 0 Cash Flow -1000.00 100.00 103.50 107.12 110.87 114.75 118.77 122.93 127.23 131.68 136.29 ($) 4573.3 -229.73 4 5 6 7 -718.3 8 9 10
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
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Please provide a step-by-step solution with an explanation.
Transcribed Image Text:Question 4
Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000
(investment) and a positive cash flow of $100 in year 1 growing at 3.5% per year
until t=10 (values are displayed with two digits after decimal point, which will
lead to a small rounding error). If the discount rate attributed to the project is
8%, what is the present value of these cash flows net of the initial (t=0)
investment? (Hint: While you can use multiple present value operators to
discount each cash flow and then add them up, it is more efficient to use the
NPV formula in Excel.)
1 2 3
Correct Answer
You Answered
Time 0
Cash
Flow -1000.00 100.00 103.50 107.12 110.87 114.75 118.77 122.93 127.23 131.68 136.29
($)
4573.3
-229.73
4 5 6 7
-718.3
8 9
10
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