An alternative requires $12000 to be paid at the end of year 1, year 2, and year 3. All values are in constant dollars. Using the tables in the chapter, compute the NPV of this alternative. Round intermediate calculations to two decimal places.
As repayment of funds is moved further out into the future, it becomes worth less in today's dollars. We call this reduced value the NPV, and find it using discount factors. Your book should provide you with a table such as this one for finding these values:
Mid year factors End of year factors
Project Constant Current ...
Step-by-step calculation of the NPV for a project.