Question 33747
Calculate the NPV(Net Present Value) for a project costing $250,000 which will then provide $25,000 annually for 25 years. The discount rate is 5%. What would the NPV be if the inflows were $20.000 annually for only 20 years?
TABULATE AS FOLLOWS IN XL WORK SHEET WHICH IS SELF EXPLANATORY.IF YOU GO TO FUNCTIONS-FINANCIALS AT THE END AND GIVE THE DISCOUNT RATE OF 0.05 AND NET INFLOW COLUMN AS THE DATA,YOU WILL GET NPV AT THE END.THE FORMULA IN XL IS.
 =NPV(0.05,D256:D281)WHERE 0.05 IS THE DISCOUNT RATE GIVEN AS 5% PER YEAR AND D256:D281 IS THE COLUMN WHERE NETINFLOW IS DEPICTED.IF YOU WANT TO KNOW MATHMATICAL FORMULA FOR THIS PLEASE COME BACK AND WE SHALL EXPLAIN


YEAR	INFLOW	OUTFLOW	NETINFLOW	YEAR	INFLOW	OUTFLOW	NETINFLOW
1		250000	-250000...	1		250000	-250000
2	25000		25000...	2	20000		20000
3	25000		25000...	3	20000		20000
4	25000		25000...	4	20000		20000
5	25000		25000...	5	20000		20000
6	25000		25000...	6	20000		20000
7	25000		25000...	7	20000		20000
8	25000		25000...	8	20000		20000
9	25000		25000...	9	20000		20000
10	25000		25000...	10	20000		20000
11	25000		25000...	11	20000		20000
12	25000		25000...	12	20000		20000
13	25000		25000...	13	20000		20000
14	25000		25000...	14	20000		20000
15	25000		25000...	15	20000		20000
16	25000		25000...	16	20000		20000
17	25000		25000...	17	20000		20000
18	25000		25000...	18	20000		20000
19	25000		25000...	19	20000		20000
20	25000		25000...	20	20000		20000
21	25000		25000...	21	20000		20000
22	25000		25000				
23	25000		25000				
24	25000		25000				
25	25000		25000				
26	25000		25000				
	NPV		$97,474.87 		NPV-NEGATIVE	($719.80)