Answer:
At a discount rate of zero percent this investment has a net present value of 6000, but at the relevant discount rate of 17 percent the project's net present value is -5739.
Explanation:
See document attached. To get the net present value, we make a cash-flow in excel.
At moment the investment is =$-36,000
Moment 1 and 2 = $12,000 /moment 3 =$18000
We calculate the Net cash flow (that is the difference between benefits and cost).
To get net present value, we use VNA formula.
=VNA(required rate of return; Net cash flow from moment 0 to moment 3 )+Net cash flow at moment 0
Situation 1
Interest rate 0%
Net Present Value (NPV) 6000
Situation 2
Interest rate 17%
Net Present Value (NPV) -5739
