Question
Question #1 (3) A. Which cash flow below generates the largest NPV? (1) B. What is the value for the largest NPV? (2) C. Which
Question #1 |
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(3) A. Which cash flow below generates the largest NPV? |
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(1) B. What is the value for the largest NPV? |
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(2) C. Which cash flow below generates the least NPV? |
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(2) D. What are the three primary differences between the cash flow cited in A vs. the cash flow cited in C? I.e. explain what forces were at play that caused one to be the largest and the other to be the least? |
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(2) E. If you were the business owner, which cash flow of the two would you prefer? |
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| MARR | Initial Investment | 1 | 2 | 3 | 4 | 5 | 6 | 7 | NPV |
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CF1 | 17% | -$400,000.00 | $147,216.40 | $218,129.49 | $210,904.66 | $292,567.57 | $394,849.36 | $394,849.36 | $394,849.36 |
| NPV1 |
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CF2 | 20% | -$500,000.00 | $176,659.68 | $261,755.39 | $253,085.59 | $351,081.08 | $473,819.23 | $473,819.23 | $473,819.23 |
| NPV2 |
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CF3 | 15% | -$1,000,000.00 | $141,327.74 | $209,404.31 | $202,468.47 | $280,864.87 | $379,055.39 | $379,055.39 | $379,055.39 |
| NPV3 |
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CF4 | 10% | -$1,000.00 | $70,663.87 | $104,702.15 | $101,234.23 | $140,432.43 | $189,527.69 | $189,527.69 | $189,527.69 |
| NPV4 |
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CF5 | 22% | -$10,000.00 | $141,327.74 | $209,404.31 | $202,468.47 | $280,864.87 | $379,055.39 | $379,055.39 | $379,055.39 |
| NPV5 |
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CF6 | 15% | -$300,000.00 | $176,659.68 | $261,755.39 | $253,085.59 | $351,081.08 | $473,819.23 | $473,819.23 | $473,819.23 |
| NPV6 |
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CF7 | 17% | -$250,000.00 | $132,494.76 | $196,316.54 | $189,814.19 | $263,310.81 | $355,364.42 | $355,364.42 | $355,364.42 |
| NPV7 |
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CF8 | 21% | -$400,000.00 | $117,920.34 | $174,721.72 | $168,934.63 | $234,346.62 | $316,274.34 | $316,274.34 | $316,274.34 |
| NPV8 |
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CF9 | 25% | -$1,000,000.00 | $182,400.00 | $279,055.22 | $200,029.54 | $374,955.46 | $506,003.89 | $560,030.89 | $509,603.89 |
| NPV9 |
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CF10 | 5% | -$5,000.00 | $3,018.76 | $4,472.88 | $4,324.73 | $5,999.27 | $8,096.62 | $8,096.62 | $8,096.62 |
| NPV10 |
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