PRACTICE TEMPLATE
Find the NPV for Project B. The discount rate is \( 10 \%(0.10) \), the expected cash flow for year one is \( \$ 50,000 \), the expected cash flow for year two is \( \$ 25,000 \), and the cost of project is \( \$ 40,000 \).
First, find the present value using the financial function \( = \) NPV(discount rate, cash flow for year one, cash flow for year two) in cell B5.
Then, find the NPV using the Excel formula for subtraction: =present value-cost of project in cell \( \mathrm{B} 7 \).
Use the NPV function to calculate the present value: \( = \) NPV(discount rate, cash flow for year one, cash flow for year two)
\begin{tabular}{|l|l|l|l|}
\cline { 2 - 4 } & \multicolumn{2}{c|}{ A } & \multicolumn{1}{c|}{ B } \\
\hline 1 & Variable & Amount & \\
\hline 2 & Discount rate & & \( 10 \% \) \\
\hline 3 & Cash flow for year one & & \( \$ 50,000.00 \) \\
\hline 4 & Cash flow for year two & \( \$ 25,000.00 \) \\
\hline 5 & Present value (use NPV function) & =NPV(B2,B3,B4) & \\
\hline 6 & Cost of project & & \( \$ 20,000.00 \) \\
\hline 7 & Net present value (use subtraction) & =B5-B6 & \\
\hline & & & \\
\hline
\end{tabular}
This needs a little more work. Review the suqgested edits and try again.
