NPV Year Cash Flow PV Factor @10% Present Value 0 -$1,700,000 1 -$1,700,000 1 $3

Question

NPV



Year Cash Flow PV Factor @10% Present Value
0 -$1,700,000 1 -$1,700,000
1 $348,068.18 0.909091 $316,426
2 $478,925.62 0.751315 $359,824
3 $435,714.28 0.564898 $246,134
4 $396,917.80 0.386917 $153,574
5 $359,937.88 0.240321 $86,501
6 $157,909.60 0.135775 $21,440
7 $144,072.16 0.069987 $10,083
8 $224,065.42 0.032704 $7,328





NPV -$498,690
I'm   confused here for PV factor should  I   use th e(1+.10)^n here. For exapmle year two would be (1+.10)^2 (1+1.21) and   so on. Or do I just calculate each years PV Factor at 1.1?




NPV



Year Cash Flow PV Factor @10% Present Value
0 -$1,700,000 1 -$1,700,000
1 $348,068.18 0.909091 $316,426
2 $478,925.62 0.751315 $359,824
3 $435,714.28 0.564898 $246,134
4 $396,917.80 0.386917 $153,574
5 $359,937.88 0.240321 $86,501
6 $157,909.60 0.135775 $21,440
7 $144,072.16 0.069987 $10,083
8 $224,065.42 0.032704 $7,328





NPV -$498,690
I'm   confused here for PV factor should  I   use th e(1+.10)^n here. For exapmle year two would be (1+.10)^2 (1+1.21) and   so on. Or do I just calculate each years PV Factor at 1.1?

Explanation / Answer

for first year, pv factor = 1/(1 + 0.1)

2nd year, pv factor = 1/(1 + 0.1)^2

3rd year, pv factor = 1/(1.1^3) and so on

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