Question

You have 3 projects to consider.

Project A with current and projected future rate of return

Discount Factor at            17%.

Yr	Inflows	Outflows	Netflow	Discounted netflow	Discounted rate
0		-$450,000	-$450,000	-$450,000	1.0000
1	$150,000		$150,000	$128,205	0.8547
2	$150,000		$150,000	$109,577	0.7305
3	$150,000		$150,000	$93,656	0.6244
4	$150,000		$150,000	$80,048	0.5337
5	$150,000		$150,000	$68,417	0.4561

Project B with current and projected future rate of return

Discount Factor   17%

Yr	Inflows	Outflows	Netflow	Discounted netflow	Discounted rate
0		-$400,000	-$400,000	-$400,000	1.0000
1	$0		$0	$0	0.8547
2	$50,000		$50,000	$36,526	0.7305
3	$200,000		$200,000	$124,874	0.6244
4	$300,000		$300,000	$160,095	0.5337
5	$200,000		$200,000	$91,222	0.4561

Project C: with current and projected future rate of return

Discount Factor               17%

Yr	Inflows	Outflows	Netflow	Discounted netflow	Discounted rate
0		-$105,250	-$105,250	-$105,250	1.0000
1	$25,000		$25,000	$21,368	0.8547
2	$25,000		$25,000	$18,263	0.7305
3	$25,000		$25,000	$15,609	0.6244
4	$25,000		$25,000	$13,341	0.5337

answer the following questions.

	1.	Project A NPV. You do not include the initial $XXXXX cost as one of the values, because the payment occurs at the beginning of the first period is $29,902
	2.	the highest project is A.
	3.	Project C NPV. You include the initial $XXXXX cost as one of the values, because the payment occurs at the end of the first period is not $18,180
	4.	Project B NPV. You do not include the initial $XXXXX cost as one of the values, because the payment occurs at the beginning of the first period is $13,717
	5.	Project B NPV. You include the initial $XXXXX cost as one of the values, because the payment occurs at the end of the first period is $10,869
	6.	Project C NPV. You do not include the initial $XXXXX cost as one of the values, because the payment occurs at the beginning of the first period is -$21,271
	7.	Project A NPV. You include the initial $XXXXX cost as one of the values, because the payment occurs at the end of the first period is $26,557

Answer 1

Project A NPV=-450000+150000/17%*(1-1/1.17^5)=29901.92

Project B NPV=-400000+0/1.17+50000/1.17^2+200000/1.17^3+300000/1.17^4+200000/1.17^5=12717.03378

Project C NPV=-105250+25000/17%*(1-1/1.17^4)=-36669.1247

the highest project is A.
You have to include the initial cost for all projects