for the cash flows in the previous problem, what is the npv at a discount rate of 0 percent? what if the discount rate is 10 percent? if it is 20 percent? if it is 30 percent?

Respuesta :

the npv is -$243.51 when there is a 0% discount applied. The 10% discount rate is $21000, the 20% discount is $17441.02, and the 30% discount is $14,789.35.

Current Inflow Value = Cash Inflow

*Amount in effect at the moment (rate%, time period)

1. Present value of inflows = (6400+8700+5900) =$21000; hence, net present value (NPV) = Present value of inflows minus Present value of outflows = $8,000

2. The current value of inflows is 6400/1.1+8700/1.12+5900/1.13 =$17441.02 (approximately), while the net present value is (17441.02-13000) =$4441.02. (approx).

3. The current value of inflows equals 6400/1.2+8700/1.22+5900/1.23 ($14,789.35). (approx)

NPV = (14,789.35-13000) = $1789.35. (approx).

4. The approximate present value of the inflows is $6400/1.3, $8700/1.3, and $5900/1.3, which results in an NPV of ($12,756.49-13000)=-$243.51. (approx).

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