y Entering Valves into the Cash Flow Worksheet Pressing the key accesses the CF worksheet, and the up and down arrow keys scroll through the list, as needed. There is no leital cash tow (att 0) in this example, so press ENTER to affirm the zere value and scroll down the list. Type the first year's cash flow and press ENTER. Scroll down and enter the number of ames this cash flow occurs consecutively (once) and press ENTER. Later you see a cash flow that repeats. Continue entoring cach news and their frequencies down the list. The necessary keystrokes are shown below. Net Present Value (NPV) The NPV function calculates the cumulative present values of a series of cash flows all at once. CF NPV= An investment with a positive NPV adds value, whereas an investment with a negative NPV loses value. Assuming a 9% interest rate, what is the NPV of the cash flow stream shown above? NPV=> Assuming a new 7% interest rate, what is the NPV of the cash flow stream shown above? NPV= This example demonstrates the relationship between interest rates and present values. As interest rates increase, the present value (PV), or net present value (NPV), will, Grade It Now Save & Continue IRR solves for the interest rate at which the project's cash flows "break even." Assume the previous cash flow stream is a possible Investment priced at $1,850. Now the cash flow stream is: -$1,850 $100 $400 $800 $800 $500 2 3 4 5 Enter values into the CF worksheet Ike before, or if you haven't cleared out the worksheet's memory, access the CF worksheet and just change CFo Press IRR to access the IRR function and CPT to calculate. What is the internal rate of return (IRR) of the cash flow stream described above? Back to Assignment Attempts Keep the Highest/3 18. Cash Flow Worksheet Check Your Understanding You are considering an investment that requires a $1,000 investment today, but is expected to generate cash flows of $200, $300, $300, and $400 at the end of each of the next four years, respectively. A timeline of this Investment's cash flows is shown below: -$1,000 $200 $300 $300 $400 + 1 2 If the appropriate interest rate is 10%, what is the net present value (NPV) of this investment? NPV of the project- This investment probably be accepted because it value. What is the internal rate of return (IRR) of this investment? IRR= Grade II Mem 7 8 A 5 6 TI BAII Plus image used with permission of copyright owner, Texas Instruments Incorporated. Text superimposed on product display by Cengage Learning, Inc. does not represent actual display output. A portion of loan payments goes toward covering the interest due on the loan, while the rest reduces the loan's balance. Early in a loan's life, its balance is high and a substantial portion goes toward interest, but over time the balance declines, as does the portion paid toward interest. An amortization schedule illustrates how interest is covered and principal repaid by loan payments over time. You have secured an 8%, $500,000 bank loan to be paid off in seven equal end-of-year annual payments. What is the required loan payment? Scanned with CamScanner