Q15) What is the NPV of this project if the discount rate is 10%?

Round your answer to the nearest dollar. For example, if your answer is $100.68, please enter $101.

(Please show your work in Excel and enter the numerical answer below)

Question

Q15) What is the NPV of this project if the discount rate is 10%?

Round your answer to the nearest dollar. For example, if your answer is $100.68, please enter $101.

(Please show your work in Excel and enter the numerical answer below)

BlackTom AI · Accepted Answer

We start by understanding the task: compute the net present value (NPV) of a project at a given discount rate, then round to the nearest dollar.

Key concepts to use:
- NPV = sum of present values of all cash flows, including the initial investment (which is typically a negative cash flow at time 0).
- Present value of a cash flow CF at time t is CF / (1 + r)^t, where r is the discount rate.
- The discount rate provided here is 10% (0.10).

Step-by-step approach you would apply:
1) Identify all cash flows associated with the project, including the initial outlay (time 0) and any subsequent inflows or outflows at future periods. Note which cash flows occur at which time periods (t = 0, 1, 2, ...).
2) For each future cash flow (t > 0), calculate its present value using PV = CF_t / (1 + 0.10)^t.
3) Sum all present values, including the initial cash flow at t = 0 (which is already in present value terms, since no discounting is needed for t = 0).
4) The resulting sum is the NPV. Round this final value to the nearest dollar, as instructed (to the nearest whole dollar: e.g., 100.68 becomes 101).

Important notes and common pitfalls:
- If the project involves an initial investment followed by a series of positive or negative cash flows, ensure the sign convention is consistent (negative for outflows, positive for inflows).
- Double-check the timing of each cash flow; misplacing a cash flow in the wrong period changes the discount factor and thus the NPV.
- When rounding, apply standard rounding rules to the final NPV value after summing all discounted cash flows.

Given information in the prompt:
- The discount rate is explicitly 10%. No cash-flow schedule is provided in the text you shared, so you would need the actual cash flows (the full set of CF_t by year) to perform the calculation.

Note about the provided answer field:
- The provided answer shown is -$55,277. If you have the cash flow timetable used to produce that result, you would replicate the steps above and round to the nearest dollar as required; however, without the cash-flow details, we cannot independently verify or reproduce the exact NPV value.

In practical Excel terms, you would typically use a sequence of PV functions or a SUMPRODUCT/NPV function tailored to the exact cash-flow timeline, ensuring the initial outlay is included as a negative value at t = 0, and then applying the ROUND function to the final result if required by the instruction.

BAFI 355 Test Quiz (Midterm) - Requires Respondus LockDown Browser

Q15) What is the NPV of this project if the discount rate is 10%? Round your answer to the nearest dollar. For example, if your answer is $100.68, please enter $101. (Please show your work in Excel and enter the numerical answer below)

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