c. Net Present Value Profile (I give full credit for just TRYING to do this) Here is a step-by-step example of how you do the calculation - see ch. 12, problem 32: ear Cash Flows NPV - For Problem 12-32: do not use for 12-31e! Initial cost $15,000) $8,000 $5,000 $7,000 W N $4,000 a. Determine the net present value of the project based on a zero discount rate. $4,000 Net Present Value $4,000 b. Determine the net present value of the project based on a 10 percent discount rate. Discount Rate 10% Net Present Value $1,063 $3,000 c. Determine the net present value of the project based on a 20 percent discount rate (it will be negative). Discount Rate 20% Net Present Value ($1,157) $2,000 d. Draw a net present value profile for the investment. (Use a scale up to 20 percent on the horizontal axis, with 5 percent increments. ) Observe the discount rate at which the net present value is zero. This is an approximation of the internal rate of return on the project. (Use line chart within "Insert" to do this in MS Excel, $1,000 Discount Rates NPV 0 $4,000 5% $2,424 SO 10% $1,063 0 5% 10% 15 20% 15% ($120) 20% ($1,157) e. Now you can do the same (with two lines) ($1,000) for problem 12-31! ($2,000)