Consider the following expected net cash flows for a project Year Expected NCF Certainty Equivalent Factor Certainty Equivalent Cash Flows 0 $(100,000) 1 0 1 80,000 0 5 2 60,000 0 5 3 70,000 0 5 4 10,000 0 6 5 10,000 0 4 Your boss wants you to calculate the NPV of this project and says to use the annual risk free rate of 3 as a discount rate Calculate NPV using this discount rate, without any risk adjustment

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Question: Consider the following expected net cash flows for a project: Year Expected NCF Certainty Equivalent Factor Certainty Equivalent Cash Flows 0 $(100,000) 1.0 1 80,000

Consider the following expected net cash flows for a project:

Year	Expected NCF	Certainty Equivalent Factor	Certainty Equivalent Cash Flows
0	$(100,000)	1.0
1	80,000	0.5
2	60,000	0.5
3	70,000	0.5
4	10,000	0.6
5	10,000	0.4

Your boss wants you to calculate the NPV of this project and says to use the annual risk-free rate of 3% as a discount rate. Calculate NPV using this discount rate, without any risk adjustment.

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