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
Please refer attached file for better clarity of functions in MS Excel.
Cost of project=Co=$700,000
No. of periods=NPER=10
Rate of interest=RATE=9%
Type of payment=TYPE=0 assume year end cash flows
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)
Cost of ...
Solution describes the steps to calculate NPV for the given projects. Calculations are carried out the with the help of functions in MS Excel.