Pipette Medical Services is considering an investment of $200,000. Assume the discount rate is 18%. Data...
Pipette Medical Services is considering an investment of $200,000. Assume the discount rate is 18%. Data related to the cash inflows are as follows:
|
Year |
Cash Inflows |
|
1 |
$100,000 |
|
2 |
92,000 |
|
3 |
120,000 |
|
4 |
160,000 |
|
5 |
100,000 |
Using a spreadsheet or financial calculator, determine the net
present value for the investment.
The investment's net present value is:
Homework Answers
Answer
--With calculation
| Year | Cash Inflows | Present value factor at 18% | Present Value of infloed |
| [A] | [B = 1/1.18Year] | [C = A x B] | |
| 1 | $100,000 | 0.847457627 | $84,746 |
| 2 | $92,000 | 0.71818443 | $66,073 |
| 3 | $120,000 | 0.608630873 | $73,036 |
| 4 | $160,000 | 0.515788875 | $82,526 |
| 5 | $100,000 | 0.437109216 | $43,711 |
| Total Present value of Cash inflows (A) | $350,092 | ||
| Present value of Cash outflows (B) | $200,000 | ||
| Investment's Net Present Value (A - B) | $150,092 [Answer, rounded off] | ||
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