Question
Hello, my manual NPV calculation is not matching the excel NPV formula and I can't understand why. Here is the problem set up. You and
Hello, my manual NPV calculation is not matching the excel NPV formula and I can't understand why. Here is the problem set up. You and your business partner identify an apartment building which you can purchase for $6 million today.
According to your calculations, your annual profit (after all expenses) will be $600,000 received at the end of each of the next four years (ex: your first $600,000 payment will be received at the end of Year 1).
Finally, having established a track record, you plan on selling the buildings for $10.6 million at the end of the fourth year.
Using a table, lay out the stream of cash flows from this project as shown in class.Clearly indicate the period, the cash inflow / outflow during each period, and the source (or use) of the cash flow.
My manual answer is= $4,295,103.92
Excel NPV formula is= $4,032,961.43
Can you please help me identify (1) which is correct, (2) why they aren't matching.
Thanks.
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