A project has the following cash flows: What is the NPV at a discount rate of ze

Question

A project has the following cash flows: What is the NPV at a discount rate of zero percent? What is the NPV at a discount rate of 11 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) What is the NPV at a discount rate of 21 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) What is the NPV at a discount rate of 29 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16))

Explanation / Answer

Calculation of the Net Present Value NPV = Present Value of Cash Inflows- cash Outflow 1 Discount Rate 0 Percent NPV = 7200+8500+7000-16500 $6,200 2 Discount Rate 11 Percent NPV = 7200/(1.11)+8500/(1.11)^2+7000/(1.11)^3-16500 7200*.901+8500*.811+7000*.731-16500 $2,003.61 2 Discount Rate 21 Percent NPV = 7200/(1.21)+8500/(1.21)^2+7000/(1.21)^3-16500 7200*.826+8500*.683+7000*.565-16500 5950.41+5805.61+3951.31-16500 ($792.65) 3 Discount Rate 29 Percent NPV = 7200/(1.29)+8500/(1.29)^2+7000/(1.29)^3-16500 7200*.775+8500*.601+7000*.466-16500 ($2,549.90)

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