A3 4b We have two mutually exclusive investments with the following cash flows: Year Investment A Investment B 0 –$100 –$100 1 10 50 2 30 40 3 50 30 4 70 20 b. Calculate the NPV profile for each...


A3 4b


We have two mutually exclusive investments with the following cash flows:





































Year




Investment A




Investment B



0



–$100



–$100



1



10



50



2



30



40



3



50



30



4



70



20




b. Calculate the NPV profile for each investment, using the discount rates of 0%, 5%, 10%, 15%, 20%, and 25%. Perform this task in an Excel spreadsheet.
Cautionary note:
If you use the =NPV() function in Excel to calculate the NPVs, it will provide incorrect answers. The NPV() function actually calculates the present value of all cash inflows. The NPV should be calculated as =NPV(all cash inflows) – initial cash outflow.




Jun 07, 2022
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