What is the discount rate for year 2? ____________ What is the NPV of all costs for year 1? ____________________ What is the NPV of benefits for year 2? _________________ What is the NPV of benefits for year 5? _________________ What is the NPV of all costs in year 5? ___________________ What is the TOTAL NPV of benefits? __________________ What is the TOTAL NPV of all costs? ____________________ What is the OVERALL NPV? _________________________ What is the ROI? ____________________________________ When does the project break-even? _____________________ What is the break-even fraction? _______________________

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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What is the discount rate for year 2? ____________

What is the NPV of all costs for year 1? ____________________

What is the NPV of benefits for year 2? _________________

What is the NPV of benefits for year 5? _________________

What is the NPV of all costs in year 5? ___________________

What is the TOTAL NPV of benefits? __________________

What is the TOTAL NPV of all costs? ____________________

What is the OVERALL NPV? _________________________

What is the ROI? ____________________________________

When does the project break-even? _____________________

What is the break-even fraction? _______________________

 

Project B
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Net Economic
85000
85000
85000
85000
85000
Benefit
Discount Rate
1.000
.9091
.7513
.6830
.6209
(10%)
PV of Benefits
77274
70244
63861
58055
52777
NPV of all
77274
X
211378
269433
X
Benefits
One-Time Costs
(75000)
Recurring Costs
(40000)
(40000)
(40000)
(40000)
(40000)
Discount Rate
1.000
.9091
.7513
.6830
.6209
(10%)
PV of Recurring
(36364)
(33056)
(30052)
(27320)
(24836)
Costs
NPV of all Costs
(75000)
(144420)
(174472)
(201792)
Overall NPV
Overall ROI
Break-even
Analysis
Yearly NPV Cash
(75000)
40910
37188
33809
30735
27941
Flow
Overall NPV cash
(75000)
(34091)
3098
36906
67641
95582
Flow
Break-even
fractions
Break-even
Х уears
occurs at
Transcribed Image Text:Project B Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total Net Economic 85000 85000 85000 85000 85000 Benefit Discount Rate 1.000 .9091 .7513 .6830 .6209 (10%) PV of Benefits 77274 70244 63861 58055 52777 NPV of all 77274 X 211378 269433 X Benefits One-Time Costs (75000) Recurring Costs (40000) (40000) (40000) (40000) (40000) Discount Rate 1.000 .9091 .7513 .6830 .6209 (10%) PV of Recurring (36364) (33056) (30052) (27320) (24836) Costs NPV of all Costs (75000) (144420) (174472) (201792) Overall NPV Overall ROI Break-even Analysis Yearly NPV Cash (75000) 40910 37188 33809 30735 27941 Flow Overall NPV cash (75000) (34091) 3098 36906 67641 95582 Flow Break-even fractions Break-even Х уears occurs at
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