Prepare a net present value chart for your simulation business. Find the highest
ID: 1175850 • Letter: P
Question
Prepare a net present value chart for your simulation business. Find the highest net profit after tax your firm has had in this game thus far. Use this number as your baseline. Now apply a 20 % growth factor for each of the next five years. Use the discount factor percentages shown on the example model. What is the value of your business using the net present value model?
Baseline: ___54,366_______________________
Year Projected Profit Discount Factor 6% Net Discount Profit
.943
1.
2. .890
3. .840
4. .792
5. .747
Total Projected Profit: _______________ Total Discounted Profit: __________________
Explanation / Answer
As per information of the question baseline amount is given $54366 and after this it increases 10% year by year.
Year
Projected profit
Discount factor 6%
Net discount factor
1
$59802.60
.943
$56393.85
2
$65782.86
.890
$58546.74
3
$72361.15
.840
$60783.37
4
$79597.26
.792
$63041.03
5
$87556.99
.747
$65405.07
Total projected profit = $365100.86
Total discounted profit = $304170.06
Year
Projected profit
Discount factor 6%
Net discount factor
1
$59802.60
.943
$56393.85
2
$65782.86
.890
$58546.74
3
$72361.15
.840
$60783.37
4
$79597.26
.792
$63041.03
5
$87556.99
.747
$65405.07