00:01
Hello, so we're going to be calculating the net present value, which is going to be npv, where we're going to take the sum from n to t equals one using this equation.
00:13
Alright, so we have cft is our cash flow for t years, we have r is our discount rate, which in this case is 0 .09, because it's 9%.
00:35
And we have n is our number of years, which is three years.
00:38
So n equals three.
00:39
So now we can do the sums, we only have three values that have been given to us.
00:45
So given the projected annual net cash flow of 27 ,800, and the discount rate of 9%, we can calculate the npv as follows.
00:56
Npv for year one, so we'll just write npv one is equal to 27 ,800 over one plus 0 .09 to the first power, because it's the first year, and that's going to give us a total of 25 ,504 .58, excuse me, five, nine, and we're going to do the same thing for the next two years, we have npv two is equal to 27 ,800, one plus 0 .09 to the second power, and then we have npv three, and that's equal to 27 ,800 over one plus 0 .09 cubed...