Workshop_Q_week5_calculations_solved.xls

Workshop_Q_week5_calculations_solved.xls - 6 Consider the...

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6. Consider the following project: Year 0 -28,000 1 12,500 2 18,700 3 11,800 What is the NPV of this project if the discount rate is zero? What if it is 10%? What is the IRR of this project? Year 0 -28,000 1 12,500 2 18,700 3 11,800 NPV(0%) 15,000 NPV(10%) 7,683.70 =NPV(0.1,B5:B7)+C14 IRR 25.02% Cash flow (£) Cash flow (£)
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The NPV formula actually computes the PV of future cash flows
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7. Consider the following two mutually exclusive project Year Cash flow (A) Cash flow (B) 0 -£252,000 -£24,000 1 18,000 14,400 You require a 1 2 36,000 12,600 3 38,400 11,400 4 510,000 9,800 PV of CF PV of Future C NPV £107,716.12 £11,148.02 IRR 26.90% 38.27% Discount rate NPV(A) NPV(B) 0.00% £350,400.00 £24,200.00 1.00% £328,483.08 £23,091.49 2.00% £307,595.48 £22,024.53 3.00% £287,679.02 £20,997.08 4.00% £268,679.31 £20,007.20 5.00% £250,545.54 £19,053.09 6.00% £233,230.15 £18,133.04 7.00% £216,688.62 £17,245.44 8.00% £200,879.25 £16,388.78 9.00% £185,762.94 £15,561.64 10.00% £171,303.05 £14,762.65 11.00% £157,465.17 £13,990.56 12.00% £144,216.99 £13,244.16 13.00% £131,528.16 £12,522.31 14.00% £119,370.15 £11,823.93 15.00% £107,716.12 £11,148.02 16.00% £96,540.82 £10,493.60 17.00% £85,820.46 £9,859.76 18.00% £75,532.63 £9,245.64 19.00% £65,656.21 £8,650.41 20.00% £56,171.30 £8,073.30 21.00% £47,059.08 £7,513.57 22.00% £38,301.82 £6,970.51 23.00% £29,882.77 £6,443.47
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