Calculate the Net Present Value (NPV) for the project businesscase. (Use Microsoft Excel to derive the NPV assuming the databelowsubmit
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- Calculate the Net Present Value (NPV) for the project businesscase. (Use Microsoft Excel to derive the NPV assuming the databelow—submit an Excel spreadsheet as an appendix:
- Purchase price of $400,000.
- One-time project costs total of $100,000 spent in Year 0.
- Net benefits after taxes of $150,000 per year for fiveyears.
- Salvage value for Year 6 and beyond of $400,000.)
Set up a Cash Flow Table. See Table 1. Notice that adiscount rate is included.
Table 1. Cash Flow with Interest Rate
- Go to Editing and choose “?.”
- Select “More Functions”
- Select “NPV”
- Type in or select the rate
- Select year 1 to year 6 values. Hit enter
- Then add Year 0 (Notice that the investment is a negativenumber).
- Press Enter