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Net Present Value

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Please help doing 3 things:

a. - computing the incremental net income of the investment for each year

b - Compute the incremental cash flow of the investment for each year, and

c - calculate the NPV of the project if the discount rate is 12%

The information has been attached.

year 0 year 1 year 2 year 3 year 4
Investment 10000
revenue 7000 7000 7000 7000
op costs 2000 2000 2000 2000
depreciation 2500 2500 2500 2500
net working capital spending 200 250 300 200

Thank you!

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Solution Summary

The solution assists with computing the incremental net income, cash flow and NPV.

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Please see the attached file fully formatted solution.

Adjusting entries

Date Particulars Debit Credit
$ $
1 31-Jan Debtors a/c or Receivable Dr 875
Revenue a/c 875
(being Andy wright rendered services
but the revenue not yet recorded)

2 31-Jan Utility expense a/c Dr 520
To utility expense payable a/c 520
(being utility expenses
incurrend ...

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  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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