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How do I calculate Return on Investment for a $100,000 project budget with a 10% discount rate and the project will be completed within 6-8
How do I calculate Return on Investment for a $100,000 project budget with a 10% discount rate and the project will be completed within 6-8 months?
Figure 2-6. Detailed NPV Calculations Discount rate 10% Year PROJECT 1 H 2 3 4 5 Total Benefits S $ 2,000,000 $ 2,000,000 $ 2,000,000 $2,000,000 $ 8,000,000 Discount factor 0.91 0.83 0.75 0.68 0.62 Discounted benefits $ 1,652,893 $ 1,502,630 $ 1,366,027 $1,241,843 $ 5,763,392 Costs $ 4,000,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 6,000,000 Discount factor 0.91 0.83 0.75 0.68 0.62 Discounted costs $ 3,636,364 $ 413,223 $ 375,657 $ 341,507 $ 310,461 $ 5,077,212 Total discounted benefits - costs, or NPV $ 686,180 Note: The discount factors are not rounded to two decimal places. They are calculated using the formula discount factor =1/(1+discount rate)^yearStep by Step Solution
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