Finance: Net present value.
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Outflows
Initial Investment now: $235,000
End of year:
1: $150,000
2: $200,000
3: $250,000
4: $300,000
5: $350,000
Inflows
Initial investment now: $-------
End of Year:
1: $200,000
2: $250,000
3. $300,000
4: $450,000
5: $500,000
1. Compute the NPV for all these cash flows. This should be a single amount. Use a discount rate of 14%.
2. Suppose the minimum desired rate was 12%. Without doing further calculations, determine whether the NPV is positive or negative. Explain.
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Solution Summary
The problem deals with applying the time value of money concept.
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PRESENT VALUES OF CASH INFLOWS
Outflows
Initial investment $235,000
End of year:
1 $150,000
2 $200,000
3 $250,000
4 $300,000
5 $350,000
Inflows
Initial investment $0
End of year:
1 $200,000
2 $250,000
3 $300,000
4 $450,000
5 $500,000
1. Compute the NPV for all these cash flows. This should be a single ...
Education
- B. Sc., University of Nigeria
- M. Sc., London South Bank University
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