Problem 13-1 NPV with Normal Cash Flows (LG13-3) Compute the NPV for Project M i
ID: 2795094 • Letter: P
Question
Problem 13-1 NPV with Normal Cash Flows (LG13-3)
Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)
NPV =
Problem 13-2 NPV with Normal Cash Flows (LG13-3)
Compute the NPV statistic for Project Y if the appropriate cost of capital is 10 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)
NPV =
Project M Time: 0 1 2 3 4 5 Cash flow: –$2,100 $570 $700 $740 $820 $320Explanation / Answer
Statement showing Cash flows Project M Particulars Time PVf 9% Amount PV Cash Outflows - 1.00 (2,100.00) (2,100.00) PV of Cash outflows = PVCO (2,100.00) Cash inflows 1.00 0.9174 570.00 522.94 Cash inflows 2.00 0.8417 700.00 589.18 Cash inflows 3.00 0.7722 740.00 571.42 Cash inflows 4.00 0.7084 820.00 580.91 Cash inflows 5.00 0.6499 320.00 207.98 PV of Cash Inflows =PVCI 2,472.41 NPV= PVCI - PVCO 372.41 Statement showing Cash flows Project Y Particulars Time PVf 10% Amount PV Cash Outflows - 1.00 (8,500.00) (8,500.00) PV of Cash outflows = PVCO (8,500.00) Cash inflows 1.00 0.9091 3,730.00 3,390.91 Cash inflows 2.00 0.8264 4,560.00 3,768.60 Cash inflows 3.00 0.7513 1,900.00 1,427.50 Cash inflows 4.00 0.6830 680.00 464.45 PV of Cash Inflows =PVCI 9,051.45 NPV= PVCI - PVCO 551.45