# Sample of NPV

May 7th, 2015
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QUESTIONS CHAPTER 2 a.| PV = \$100/1.0110 = \$90.53| b.| PV = \$100/1.1310 = \$29.46| c.| PV = \$100/1.2515 = \$ 3.52| d.| PV = \$100/1.12 + \$100/1.122 + \$100/1.123 = \$240.18|

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CorporateQUESTIONS CHAPTER 212.a.| PV = \$100/1.0110 = \$90.53|b.| PV = \$100/1.1310 = \$29.46|c.| PV = \$100/1.2515 = \$ 3.52|d.| PV = \$100/1.12 + \$100/1.122 + \$100/1.123 = \$240.18|| |14.The present value of the 10-year stream of cash inflows is:Thus:NPV = \$800,000 + \$886,739.66 = +\$86,739.66CF0 =| -800,000| | | I = 14|CF1 =| 170,000| F1= 10| | Cpt NPV = 86,739.66|At the end of five years, the factorys value will be the present value of the five remaining \$170,000 cash flows:N = | 5|I = | 14|Cpt. PV = | 583,623.76|Pmt = | 170,000|FV = | 0|15.Or CF0| -380| | I = | 12%|CF1| 50| | Cpt NPV = | 23.69615|CF2| 57| | | |CF3| 75| | | |CF4| 80| | | |CF5| 85| | | |CF6| 92| | | |CF7| 92| | | |CF8| 80| | | |CF9| 68| | | |CF10| 50| | | |18.We can break this down into several different cash flows, such that the sum of these separate cash flows is the total cash flow. Then, the sum of the present values of the separate cash flows is the present value of the entire project. (All dollar figures are in millions.) * Cost of the ship is \$8 millionPV = \$8 million* Revenue is \$5 million per year, operating expenses are \$4 million. Thus, operating cash flo

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