1. Calculate the net present value (NPV) of the following cash flow stream if the required rate is 12%:

Question

1. Calculate the net present value (NPV) of the following cash flow stream if the required rate is 12%:

Answer 1

Please share the cashflow stream details so that I can guide you on how to calculate NPV.

I have use hypothetical numbers to calculate NPV. The initial Investement is treated as cashflow in year 0.

In this case the NPV is negative and the project should not be accepted.

Rate(r ) 12%

Year (n) Cashflow PVIF (1+r)^-n PV(PVIF*Cashflow)

0 -100,000 1 -100,000.00

1 20,000 0.892857143 17,857.14

2 30,000 0.797193878 23,915.82

3 20,000 0.711780248 14,235.60

4 40,000 0.635518078 25,420.72

5 20,000 0.567426856 11,348.54

NPV -7,222.18