The Microsoft Excel product in your computer lab can be used to perform NPV analysis. You can

Question:

The Microsoft Excel product in your computer lab can be used to perform NPV analysis. You can also find a simple NPV calculator at www.investopedia.com/

calculator/NetPresentValue.aspx (or perform a Web search for others using the term NPV calculator).

a. Enter the data for the project in Figure CE21-5, but change the initial expense to $125,000.

Explain the results.

b. Enter the data for the project in Figure CE21-5, but change the discount rate to 3 percent.

Explain the results. Change the discount rate to 15 percent and explain the results. What does this exercise tell you about the role and importance of the discount rate?

c. Enter the data for the project in Figure CE21-5, and experiment with the discount rate until you make the NPV zero. What is this rate? What does this rate mean?

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