Given the spreadsheet below, what value would Excel return if you entered the following formula? =...
Given the spreadsheet below, what value would Excel return if you entered the following formula?
= NPV(B2,B5:D5)
| Discount rate | 9 | % | |||
| Cash flows | $ | −250 | $500 | $500 | |
Please show steps on how to figure this out?
Homework Answers
| Discount rate | 9.000% | ||
| Year | 0 | 1 | 2 |
| Cash flow stream | -250 | 500 | 500 |
| Discounting factor | 1.000 | 1.090 | 1.188 |
| Discounted cash flows project | -250.000 | 458.716 | 420.840 |
| NPV = Sum of discounted cash flows | |||
| NPV 0 = | 629.56 | ||
| Where | |||
| Discounting factor = | (1 + discount rate)^(Corresponding period in years) | ||
| Discounted Cashflow= | Cash flow stream/discounting factor | ||
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