For the cash flows in the previous problem, what is the NPV at a discount rate of

Question:

For the cash flows in the previous problem, what is the NPV at a discount rate of zero percent? What if the discount rate is 10 percent? If it is 20 percent? If it is 30 percent?

In the previous problem

Year _______________Cash Flow

0 ............................ −$27,000

1 ............................... 11,400

2 ............................... 16,300

3 ................................ 9,400

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...