An alternative requires $12000 to be paid at the end of year 1, year 2, and year

Question

An alternative requires $12000 to be paid at the end of year 1, year 2, and year 3. All values are in constant dollars. Using the tables in the chapter, compute the NPV of this alternative. Round intermediate calculations to two decimal places.

MID-YEAR FACTORS END-OF-YEAR FACTORS
3 Year Project
Project Constant Current Constant Current
Years Dollars ( 2.50% ) Dollars ( 4.90% ) Dollars ( 2.50% ) Dollars ( 4.90% )
1 0.9877 0.9764 0.9756 0.9533
2 0.9636 0.9308 0.9518 0.9088
3 0.9401 0.8873 0.9286 0.8663

Explanation / Answer

12000x0.9877+(12000x0.9636)+(12000x0.9401)= $34,697 12000x0.9764+(12000x0.9308)+(12000x0.8873)=$33534 12000x0.9756+(12000x0.9518)+(12000x0.9286)=$34272 12000x0.9533+(12000x0.9088)+(12000x0.8663)=$32,741

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