Answer:
For project A ,
NPV = $-4,351.65
The project A isn't acceptable because the NPV is negative
For project B ,
NPV = $67,678.24
The project is acceptable because the NPV is postive
For project C,
NPV = $-76,528.17
The project C isnt acceptable because the NPV is negative
For project D,
NPV = $98,189.82
Project D is acceptable because the NPV is postive.
For project E ,
NPV = $8,548.44
Project E is acceptable because the NPV is postive.
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Net present value can be calculated using a financial calculator
For project A,
Cash flow in year 0 = -20,000
Cash flow each year from year 1-10 = 3,000
I = 14%
NPV = $-4,351.65
The project A shouldn't be embarked on because the NPV is negative
For Project B,
Cash flow in year 0 = $ -600,000
Cash flow in year 1 = 120,000
Cash flow in year 2 = 145,000
Cash flow in year 3 = 170,000
Cash flow in year 4 = 190,000
Cash flow in year 5 =220,000
Cash flow in year 6= 240,000
I = 14%
NPV = $67,678.24
The project should be embarked on because the NPV is postive.
For Pr. C ,
Cash flow in year 0 = -150,000,
Cash flow in year 1 = 18,000
Cash flow in year 2 = 17,000
Cash flow in year 3 = 16,000
Cash flow in year 4 = 15,000
Cash flow in year 5 = 14,000,
Cash flow in year 6 = 13,000
Cash flow in year 7 = 12,000
Cash flow in year 8 = 11,000
Cash flow in year 9= 10,000
I = 14%
NPV = $-76,528.17
The project C shouldn't be embarked on because the NPV is negative
For Pr. D,
Cash flow in year 0 = -760,000
Cash flow each year from year 1 to 8 = 185,000
I = 14%
NPV = $98,189.82
Project D should be embarked on because the NPV is postive.
For Pr. E,
Cash flow in year 0 = -100,000
Cash flow each year for year 1 to 3 = 0 cash flow in year 4 = 25,000
Cash flow in year 5 = 36,000
Cssh flpw in year 6 = 0
Cash flow in year 7 = 60,000
Cash flow in year 8 = 72,000
Cash flow in year 9 = 84,000.
I = 14%
NPV = $8,548.44
Project E is profitable and can be undertaken.
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
