A project has the following cash flows: Year 0-$15,400 Year 1-$6,100 Year 2-$7,4

Question

A project has the following cash flows:

Year 0-$15,400

Year 1-$6,100

Year 2-$7,400

Year 3-$5,900

What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

What is the NPV at a discount rate of 8 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the NPV at a discount rate of 16 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the NPV at a discount rate of 28 percent?

Explanation / Answer

Calculation of the Net Present values NPV = Present value of Cash Inflows- cash Outflows Discount Rate =0 Percent NPV = 6100+7400+5900-15400 19400-15400 NPV = $4,000 Discount Rate =8 Percent NPV = 6100/(1.08)^1+7400/(1.08)^2+5900/(1.08)^3-15400 6100*.26+7400*.857+5900*.794-15400 5648.15+6344.30+4683.61-15400 16676.06-15400 NPV = $1,276.06 Discount Rate =16 Percent NPV = 6100/(1.16)^1+7400/(1.16)^2+5900/(1.16)^3-15400 6100*.862+7400*.743+5900*.641-15400 5258.62+5499.40+3779.88-15400 ($862) Discount Rate =28 Percent NPV = 6100/(1.28)^1+7400/(1.28)^2+5900/(1.28)^3-15400 6100*.781+7400*.610+5900*.477-15400 4765.63+4516.60+2813.34-15400 NPV = ($3,304.43)

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