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NPV - Daily Payments & Mid Year Discounting

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1. Batesville Manufacturing is considering a capital investment that will provide cash flows of $1,000 a year for 20 years. The payments are spread across the year in daily payments rather than being made at year-end. The effective annual required return is 12%. What is the present value of these benefits: What would be the present value of the benefits if all cash flows occurred at midyear?

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Solution Summary

The solution provides can example to compute mid year discounting for NPV calculation as well as where payments are spread daily.

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Batesville Manufacturing.

Using Excel PV function, we can compute present value of investment. As the payments are spread daily, we will use ...

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