# Calculating the NPV for each of the given projects

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.

a)

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.