Question
Invest cash in different installments over seven years. Renovation costs in current dollars$14,500,000 Renovation cost inflation rate3.5% Year Cash Flows 0 $15,000,000 1 $ 5,000,000
Invest cash in different installments over seven years.
Renovation costs in current dollars$14,500,000
Renovation cost inflation rate3.5%
Year Cash Flows
0 $15,000,000
1 $ 5,000,000
2 $ 5,000,000
3 $ 5,000,000
4 $ 5,000,000
5 $ 0
6 $ 0
7 $ 0
8 ($19,093,731)
9 ($19,762,012)
10 ($20,453,682)
11 ($21,169,561)
NPV
How to use Goal Seek to find the Years 5, 6, and 7 cash flows that make the NPV = 0:
Note the formulae in cells B125, B126, and B127, the years for which we need to calculate the annualcash flows.
In cell B141 below, insert a zero..
$0
Go to Data / What-If Analysis / Goal Seek, input the following values, and push ok:
Set cell:B133
To value:0
By changing:B141
The values in cells B125-127 changes to $xx,xxx,xxx and cell B133 changes to $0. In this way, Goal Seekfinds the values of the cash flows in Years 5, 6, and 7 that make NPV=$0.
find the NPV (need the formula and what numbers go where in that formula) so that when using the Goal Seek, can get the Cash Flows for Year 5,6, and 7 to equal $10,742,127.
Step by Step Solution
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