PLEASE CALCULATE YELLOW PARTS
Net Present Value Option Discount Rate Number of Periods Income Future Value 1 17.00% 1 871,000 1,356,000 12.70% 48 481,000 816,000 11.00% 8 NOTE: When using NPV, the function's cash flow starts at time 1 soyou have to subtract your intia invesment after finding PV of cashflows Initial Investment Net Present Value 485,000 $744,444.44 335,000 520,000 b. Option NPV with EUL 1 2 3 Net Present Value Assume your company has decided invest in new equipment to further increase profits. Compute the NPVs of the following investments independently. 1. There is a high risk high reward investment opportunity avalible to your company. The potential return is $1,356,000 after 4 years for an initial investment of $485,000. Due to the high risk involved, your company has assiged a discount rate of 17% 2. Your company can invest in a production 3D printer for $335,000 with a useful life of 4 years, and a salvage value of $46,000. The 3D printer makes $17,000 worth of product monthly Your company has assigned a discount rate of 12.7% to this cost of capital and the risk involved 3. An initial investment of $520,000 will return $169,000 per year for 8 years. Your company has assigned a discount rate of 11% to this project based on its cost of capital and the level of risk involved in the investment. b. Compute the NPV's for the projects with equivalent useful lives (EUL). Net Present Value Option Discount Rate Number of Periods Income Future Value 1 17.00% 1 871,000 1,356,000 12.70% 48 481,000 816,000 11.00% 8 NOTE: When using NPV, the function's cash flow starts at time 1 soyou have to subtract your intia invesment after finding PV of cashflows Initial Investment Net Present Value 485,000 $744,444.44 335,000 520,000 b. Option NPV with EUL 1 2 3 Net Present Value Assume your company has decided invest in new equipment to further increase profits. Compute the NPVs of the following investments independently. 1. There is a high risk high reward investment opportunity avalible to your company. The potential return is $1,356,000 after 4 years for an initial investment of $485,000. Due to the high risk involved, your company has assiged a discount rate of 17% 2. Your company can invest in a production 3D printer for $335,000 with a useful life of 4 years, and a salvage value of $46,000. The 3D printer makes $17,000 worth of product monthly Your company has assigned a discount rate of 12.7% to this cost of capital and the risk involved 3. An initial investment of $520,000 will return $169,000 per year for 8 years. Your company has assigned a discount rate of 11% to this project based on its cost of capital and the level of risk involved in the investment. b. Compute the NPV's for the projects with equivalent useful lives (EUL)
