What is the NPV of this project if the required return is 5 percent? ( Do not ro
ID: 2648832 • Letter: W
Question
What is the NPV of this project if the required return is 5 percent? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
What is the NPV of the project if the required return is 0 percent? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
The answers are not:
2. $3,194.00
3. $8,300.00
A project has the following cash flows:Explanation / Answer
Requirement 1:
What is the NPV of this project if the required return is 5 percent?
Figures in $
Year
Cash flow
Discount rate
Disc rate :5%
Present value
A
B
A*B
0
71500
1
1
71500.00
1
51000
1/1.05
0.95
48571.43
2
28800
1/(1.05)2
0.91
26122.45
NPV
146193.88
Answer if the required return is 5 percent, NPV is $146,193.88
Requirement 2:
What is the NPV of the project if the required return is 0 percent?
Figures in $
Year
Cash flow
Discount rate
Disc rate :0%
Present value
A
B
A*B
0
71500
1
1
71500.00
1
51000
1/1.00
1.00
51000.00
2
28800
1/(1.00)2
1.00
28800.00
NPV
151,300.00
Answer if the required return is 0 percent, NPV is $ 151,300.00
Figures in $
Year
Cash flow
Discount rate
Disc rate :5%
Present value
A
B
A*B
0
71500
1
1
71500.00
1
51000
1/1.05
0.95
48571.43
2
28800
1/(1.05)2
0.91
26122.45
NPV
146193.88
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