Use Excel to calculate the expected present value of the following cash flows using a 5% discount rate? Be prepared to explain how you calculated your answer.
Homework Answers
| Year 1 Expected Cash flow =$1500*10%+$2000*50%+$2500*40% = | $ 2,150.00 | ||
| Year 2 Expected Cash flow =$3300*15% +$3600*40%+$4000*45%= | $ 3,735.00 | ||
| Let us find the PV of Expected Cash flows | a | b | |
| Year | Expected Cash flow | PV Factor @5%=1/1.05^n | PV of expected Cash flow =a*b |
| 1 | $ 2,150.00 | 0.9524 | $ 2,047.66 |
| 2 | $ 3,735.00 | 0.9070 | $ 3,387.65 |
| Total =PV= | $ 5,435.31 | ||
| So PV of Expected Cash flows =$5,435.31 |
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Use Excel to calculate the expected present value of the
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Show your work in Excel.
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b) Add an outflow of $2000 at time 0 and lower the opportunity
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Show your work in Excel.
a) What is the net present value (NPV) if the opportunity cost
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b) Add an outflow of $2000 at time 0 and lower the opportunity
cost of capital to 6%. Now, what is the net present value?
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flows (see the attached Excel sheet) and answer the following
questions.(see attached pic) a) What is the net present value (NPV)
if the opportunity cost of cost of capital is 10%? b) Add an
outflow of $2000 at time 0 and lower the opportunity cost of
capital to 6%. Now, what is the net present value?
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