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Calculating Present & Future Value: Interest Rate

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Aavish Gupta

This document discusses calculating the present and future value of a project with cash flows over 5 years and a 10% interest rate. It shows the cash flows, present value, and internal rate of return for each year. It then calculates the net present value using discounted cash flows as -66.82 and the internal rate of return as 5%, leading to the conclusion not to invest since the IRR is less than the interest rate.

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Calculating Present & Future Value: Interest Rate

Uploaded by

Aavish Gupta
22 views1 page
This document discusses calculating the present and future value of a project with cash flows over 5 years and a 10% interest rate. It shows the cash flows, present value, and internal rate of return for each year. It then calculates the net present value using discounted cash flows as -66.82 and the internal rate of return as 5%, leading to the conclusion not to invest since the IRR is less than the interest rate.

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IRR

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This document discusses calculating the present and future value of a project with cash flows over 5 years and a 10% interest rate. It shows the cash flows, present value, and internal rate of return for each year. It then calculates the net present value using discounted cash flows as -66.82 and the internal rate of return as 5%, leading to the conclusion not to invest since the IRR is less than the interest rate.

Copyright:

© All Rights Reserved
Download as XLSX, PDF, TXT or read online from Scribd
Download as xlsx, pdf, or txt
22 views1 page

Calculating Present & Future Value: Interest Rate

Uploaded by

Aavish Gupta
This document discusses calculating the present and future value of a project with cash flows over 5 years and a 10% interest rate. It shows the cash flows, present value, and internal rate of return for each year. It then calculates the net present value using discounted cash flows as -66.82 and the internal rate of return as 5%, leading to the conclusion not to invest since the IRR is less than the interest rate.

Copyright:

© All Rights Reserved
Download as XLSX, PDF, TXT or read online from Scribd
Download as xlsx, pdf, or txt
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Calculating Present & Future Value

interest rate: 10%

Year:
0 1 2 3 4 5
Cash flow -500 30 120 200 120 120
Present Value (PV) -500 27 99 150 82 75
Internal Rate of Return(IRR) -500 29 108 172 98 93

Project Net Present Value (DCF approach) -66.82

Project Net Present Value (NPV) -66.82

Internal Rate of Return (IRR) 5%

As IRR < Rate of Interest, do not invest

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