2.
Year Cash Flow Trial NPV
0 $ (3,000) 5% $ 1027.059
1 - 7% $ 419.05
2 $ (200) 8% $ 147.02
3 $ (200) 9% $ -99.228
4 $ (200)
5 -
6 $ (90)
7 $ (90)
8 $ 6,910
0 = -3,000 - 200(P/F, i*, 2) - 200(P/F, i*, 3) - 200(P/F, i*, 4) - 90(P/F, i*, 6) - 90(P/F, i*, 7) + 6,910(P/F, i*, 8)
Trial 5%
0 = -3,000 - 200(P/F, 5%, 2) - 200(P/F, 5%, 3) - 200(P/F, 5%, 4) - 90(P/F, 5%, 6) - 90(P/F, 5%, 7) + 6,910(P/F, 5%, 8)
0 = -3,000 - 200(0.9070) - 200(0.8638) - 200(0.8227) - 90(0.7462) - 90(0.7107) + 6,910(0.6768)
0 = -3,000 – 181.4 – 172.76 – 164.54 – 67.158 - 63.963 + 4,676.688
0 < 1027.059 Trial 7%
0 = - 3,000 - 200(P/F, 7%, 2) - 200(P/F, 7%, 3) - 200(P/F, 7%, 4) - 90(P/F, 7%, 6) - 90(P/F, 7%, 7) + 6,910(P/F, 7%, 8)
0 = - 3,000 - 200(0.8734) - 200(0.8163) - 200(0.7629) - 90(0.6663) - 90(0.6227) + 6,910(0.5820)
0 = - 3,000 - 174.68 - 163.26 - 152.58 - 59.967 - 56.043 + 4,021.62 0 < 415.09
Trial 8%
0 = - 3,000 - 200(P/F, 8%, 2) - 200(P/F, 8%, 3) - 200(P/F, 8%, 4) - 90(P/F, 8%, 6) - 90(P/F, 8%, 7) + 6,910(P/F, 8%, 8)
0 = - 3,000 - 200(0.8573) - 200(0.7938) - 200(0.7350) - 90(0.6302) - 90(0.5835) + 6,910(0.5403)
0 = - 3,000 - 200(0.8573) - 200(0.7938) - 200(0.7350) - 90(0.6302) - 90(0.5835) + 6,910(0.5403)
0 < 147.02
Trial 9%
0 = - 3,000 - 200(P/F, 9%, 2) - 200(P/F, 9%, 3) - 200(P/F, 9%, 4) - 90(P/F, 9%, 6) - 90(P/F, 9%, 7) + 6,910(P/F, 9%, 8)
0 = - 3,000 - 200(0.8417) - 200(0.7722) - 200(0.7084) - 90(0.5963) - 90(0.547) + 6,910(0.5019)
0 = - 3,000 – 168.34 – 154.44 – 141.68 – 53.667 – 49.23 + 3468.129 0 > -99.228
Y1 8% X1 $ 147.02
Y i X 0
Y2 9% X2 $ -99.228
i= 8.00 + 0.59 * 1 i= 8.59%
3.
Year Cash Flow Trial NPV
0 $ (100) 13% $ 1.299
1 $ 20 14% $ (1.411)
2 $ 30 15% $ (4.015)
3 $ 20
4 $ 40
5 $ 40
0 = -100 + 20(P/F, i*, 1) + 30(P/F, i*, 2) + 20(P/F, i*, 3) + 40(P/F, i*, 4) + 40(P/F, i*, 5)
Trial 13%
0 = -100 + 20(P/F, 13%, 1) + 30(P/F, 13%, 2) + 20(P/F, 13%, 3) + 40(P/F, 13%, 4) + 40(P/F, 13%, 5)
0 = -100 + 20(0.885) + 30(0.7831) + 20(0.6931) + 40(0.6133) + 40(0.5428)
0 = -100 + 17.7 + 23.493 + 13.862 + 24.532 + 21.712 0 < 1.299
Trial 14%
0 = -100 + 20(P/F, 14%, 1) + 30(P/F, 14%, 2) + 20(P/F, 14%, 3) + 40(P/F, 14%, 4) + 40(P/F, 14%, 5)
0 = -100 + 20(0.8772) + 30(0.7695) + 20(0.6750) + 40(0.5921) + 40(0.5194) 0 = -100 + 17.544 + 23.085 + 13.5 + 23.684 + 20.776
0 > -1.411 Trial 15%
0 = -100 + 20(P/F, 15%, 1) + 30(P/F, 15%, 2) + 20(P/F, 15%, 3) + 40(P/F, 15%, 4) + 40(P/F, 15%, 5)
0 = -100 + 20(0.8696) + 30(0.7561) + 20(0.6575) + 40(0.5718) + 40(0.4972)
0 = -100 + 17.392 + 22.683 + 13.15 + 22.872 + 19.888 0 > -4.015
Y1 13% X1 $ 1.299
Y I X 0
i= 13.00 + 0.47 * 1 i= 13.47%
Y2 14% X2 $ -1.411
5.
Year Cash Flow Trial NPV
0 $ 125 13% $ (0.795)
1 $ (10) 14% $ 3.598
2 $ (20)
3 $ (30)
4 $ (40)
5 $ (50)
6 $ (60)
0 = 125 - 10(P/F, i*, 1) - 20(P/F, i*, 2) - 30(P/F, i*, 3) - 40(P/F, i*, 4) - 50(P/F, i*, 5) – 60(P/F, i*, 6)
Trial 13%
0 = 125 - 10(P/F, 13%, 1) - 20(P/F, 13%, 2) - 30(P/F, 13%, 3) - 40(P/F, 13%, 4) - 50(P/F, 13%, 5) - 60(P/F, 13%, 6)
0 = 125 - 10(0.8850) - 20(0.7831) - 30(0.6931) - 40(0.6133) - 50(0.5428) - 60(0.4803)
0 = 125 – 8.85 – 15.662 – 20.793 – 24.532 – 27.14 – 28.818 0 < -0.795
Trial 14%
0 = 125 - 10(P/F, 14%, 1) - 20(P/F, 14%, 2) - 30(P/F, 14%, 3) - 40(P/F, 14%, 4) - 50(P/F, 14%, 5) - 60(P/F, 14%, 6)
0 = 125 - 10(0.8772) - 20(0.7695) - 30(0.6750) - 40(0.5921) - 50(0.5194) - 60(0.4556)
0 = 125 – 8.772 – 15.39 – 20.25 – 23.684 – 25.97 – 27.336 0 > 3.598
Y1 13% X1 $ -0.795
Y I X 0
Y2 14% X2 $ 3.598 i= 13.00 + 0.18 * 1
i= 13.18%
