Question

A project requires an initial investment of $2,000,000, and produces an annual inflow of $400,000 at the end of years 1.7. and an inflow of $600,000 at the end of year 8. What is the NPV of this project using a discount rate of 13%? $437,001.13 -$5,259.91 $337,001.13 $374,617.12 $464,596.53

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

W24 A B Initial investment $2,000,000 Annual Cash inflow [year 1-8] Single Cash inflow at Year-8 Discount rate $400,000 $200,000 13% NPV of Project $5,259.91 Alternative method to solve Year 13 Cash Flow -$2,000,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $600,000 23 NPV of project -$5,259.91 24 25

Cell reference -

ДА В Initial investment 2000000 Annual Cash inflow [year 1-8] Single Cash inflow at Year-8 Discount rate 400000 =600000-400000 0.13 NPV of Project =PV(C6,8,-C4,-C5,0)-C2 Alternative method to solve Year Cash Flow -2000000 400000 400000 400000 400000 400000 400000 400000 600000 NPV of project =NPV(C6, C14:C21)+C13

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