Requirement 1: What is the NPV at a discount rate of zero percent? (Do not round

Question

Requirement 1: What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations.) Net present value $ Requirement 2: What is the NPV at a discount rate of 8 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Net present value $ Requirement 3: What is the NPV at a discount rate of 18 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).) Net present value $ Requirement 4: What is the NPV at a discount rate of 28 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).) Net present value $

Explanation / Answer

NPV = PV of cash inflow - PV of cash outflow

Requirement 1:

At zero percent discount rate

NPV = (13600+18100+11000)-34000 = $8700

Requirement 2:

NPV at discount rate of 8%

NPV = (13600*0.9259259)+(18100*0.8573388)+(11000*0.7938322)-34000 = $2842.58

Requirement 3:

At discount rate of 18%

NPV = (13600*0.8474576)+(18100*0.7181844)+(11000*0.60863087)-34000 = -$2780.50

Requirement 4:

At discount rate of 28%

NPV = (13600*0.78125)+(18100*0.610351562)+(11000*0.476837157)-34000 = -$7082.43

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