Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000 (investment) and a...

 

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Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000 (investment) and a positive cash flow of $100 in year 1 growing at 3.5% per year until t-10 (values are displayed with two digits after decimal point, which will lead to a small rounding error). If the discount rate attributed to the project is 8%, what is the present value of these cash flows net of the initial (t=0) investment? (Hint: While you can use multiple present value operators to discount each cash flow and then add them up, it is more efficient to use the NPV formula in Excel.) Time 0 Cash Flow -1000.00 100.00 103.50 107.12 110.87 114.75 118.77 122.93 127.23 131.68 136.29 ($) 1 2 3 4 5 6 7 8 9 10 Firm XYZ is evaluating a multi-year project with year=0 cash flow of -$1000 (investment) and a positive cash flow of $100 in year 1 growing at 3.5% per year until t-10 (values are displayed with two digits after decimal point, which will lead to a small rounding error). If the discount rate attributed to the project is 8%, what is the present value of these cash flows net of the initial (t=0) investment? (Hint: While you can use multiple present value operators to discount each cash flow and then add them up, it is more efficient to use the NPV formula in Excel.) Time 0 Cash Flow -1000.00 100.00 103.50 107.12 110.87 114.75 118.77 122.93 127.23 131.68 136.29 ($) 1 2 3 4 5 6 7 8 9 10

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To calculate the present value of the cash flows net of the initial investment we need to discount e... View the full answer