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Mba670 discounted payback sample computatiion

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Net Present Value Suppose we have a project with the following cash flows and required return. What is the NPV of the project? t 0 1 2 3 4 5 Cash flow $ 36,000 21,600 18,200 22,100 Return: NPV: 11% $ 86,610.69 Excel Tip To calculate the NPV of the project using the NPV function, we entered the following: Notice one very important thing: We did not include the cash flow at time 0 in the NPV function. The reason is simp did not truly create a function that calculated the NPV, but rather created a function that calculated the present va cash flows, we use the NPV function to calculate the present value of the cash flows beyond time 0, then add the c simply go to the NPV cell above. NPV and Cash Flows at Irregular Intervals The NPV function does not really calculate the NPV of a set of cash flows, and it also has a potential problem in tha flows occur at regular intervals. If the cash flows occur at irregular intervals, we need to use the XNPV function. The date for each cash flow. Suppose we have the following set of cash flows and required return. What is the NPV of t t 2/23/2009 8/24/2009 3/5/2010 11/2/2010 6/5/2011 12/18/2011 $ Return: NPV: Cash flow (50,000) 14,000 8,000 23,000 18,000 19,000 11% $ 18,107.66 Excel Tip To calculate the NPV of the project using the XNPV function, we entered the following: With the XNPV function, you need to include the first cash flow. The NPV of the cash flows will be on the date of th What is the NPV of the project? owing: ...
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