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    Calculating the NPV for each of the given projects

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    Use MS Excel for your calculations.

    The following is a list of four projects that Capital Corporation must choose from for the coming year:

    Project Project Price Annual Net In?ows
    A 700,000 118,861
    B 670,000 109,039
    C 184,000 32,549
    D 273,000 48,305

    (a) Given a uniform rate of interest of 9% and a uniform life of the projects of 10 years each, calculate the NPVs of each Project.

    (b) Should we choose Projects A, C, D or Projects A, B, D. Explain

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    Solution Preview

    Please refer attached file for better clarity of functions in MS Excel.

    Project A
    Cost of project=Co=$700,000
    Annual inflows=PMT=-$118,861
    No. of periods=NPER=10
    Rate of interest=RATE=9%
    Type of payment=TYPE=0 assume year end cash flows
    Future Value=FV=0

    We can use PV function in MS Excel to get PV of cash inflows..

    PV of cash inflows=PV=$762,809.21 =PV(C29,C28,C27,C31,C30)

    NPV =-Co+PV=$62,809.21

    Project B
    Cost of ...

    Solution Summary

    Solution describes the steps to calculate NPV for the given projects. Calculations are carried out the with the help of functions in MS Excel.