Question

Consider a project with net benefits NBt in period t: NB0 = –30, NB1 = 15, NB2 = 25, NB3 = –3.
a. Find the net present value if the discount rate is r = 6%, 8% and 10%.
b. Now assume that the discount rate changes across periods. In specific, the discount rate for period 1 (discounting from period 1 to period 0) is r1 = 10%, the discount rate for period 2 (discounting from period 2 to period 1) is r2 = 8% and the discount rate for period 3 (discounting from period 3 to period 2) is r3 = 6%. Find the net present value.



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  • CreatedAugust 05, 2013
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