For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash
ID: 2613583 • Letter: F
Question
For the given cash flows, suppose the firm uses the NPV decision rule.
Year Cash Flow
0 –$ 164,000
1 52,000
2 87,000
3 71,000
At a required return of 8 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
At a required return of 18 percent, what is the NPV of the project? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
Requirement 1:At a required return of 8 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Requirement 2:At a required return of 18 percent, what is the NPV of the project? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
Explanation / Answer
Part A Part B year If Rate = 8% If Rate = 18% cash flow (A) present value@8%(B) present value of cash flow(A*B) cash flow (X) present value@8%(Y) present value of cash flow(X*Y) 0 - (164,000) 1 (164000) (164,000) 1 (164,000) 1 52,000 .92593 48148.36 52,000 .84746 44067.92 2 87,000 .85734 74588.58 87,000 .71818 62481.66 3 71,000 .79383 56361.93 71,000 .60863 43212.73 NPV 15,098.87 NPV (14,237.69)