Hello,
I can't figure out the answer to a question.
I have attached a screen shot of the question. I am able to calculate part A correctly as shown, but I can not get part B. The answer I got in part b about factory worth was $599,348.18.
I have followed the formulas shown exactly. On this problem I did =PV(0.09,4,-185000,0) in excel.
I have done this problem multiple times with different numbers and always get part A, but not part B. Getting part A correct tells me all my input numbers are correct, so what am I doing wrong for part B?
I have also attached screen shot of my excel sheet and you can see formula I entered in the bar above
Extracted text: Paste BI U 60 .00 Conditional Format as Cell - | Merge & Center 国Fom Formatting Table v Styles v Clipboard Font Alignment Number Styles Ce К17 =PV(0.09,4,-185000,0) E F H K L. M N P PV Of Cash Flows -$950,000.00 $169,724.7706 Year Cash Flows FVIF @ 11% -$950,000.00 1.0000 3 1. $185,000.00 1.0900 $155,710.7988 $142,853.9438 4 $185,000.00 1.1881 5 3 $185,000.00 1.2950 4 $185,000.00 1.4116 $131,058.6640 7 5 $185,000.00 1.5386 $120,237.3065 8 $185,000.00 1.6771 $110,309.4555 9 7 $185,000.00 1.8280 $101,201.3353 10 8 $185,000.00 1.9926 $92,845.2617 11 9 $185,000.00 2.1719 $85,179.1392 12 10 $185,000.00 2.3674 $78,145.9993 13 11 $185,000.00 2.5804 $71,693.5773 14 12 $185,000.00 2.8127 $65,773.9241 15 13 $185,000.00 3.0658 $60,343.0497 16 NPV Of Factory $435,077.23 17 Worth End Of Four Years $599,348.18 18 19 20 21 22 22 Problem 7 Amoritization Table Problem 14 NPV Problem 14 NPV Try 2 Problem 12 NPV MCF A ... + ...
Extracted text: Problem 2-14 Present values A factory costs $950,000. You reckon that it will produce an inflow after operating costs of $185,000 a year for 13 years. 3.33 points a. If the opportunity cost of capital is 9%, what is the net present value of the factory? (Do not round intermediate calculations. Round your answer to 2 decimal places.) O Answer is complete and correct. Net present value $ 435,077.23 O b. What will the factory be worth at the end of four years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3.