Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question

Find the NPV:  Financial Calculator:

Investment that pays $4,880 at the end of each of the next 3 years.  Initial cost of $1,220 and a cost at the end of the 2nd year of $6,100.  Interest rate is 1.7%.

My numbers in the FC are:

N: 3

I/Y: 1.7%

PV: CPT; Initial Investment cost of -7,320

PMT: 4,880 each year (3x) CF1/CF2/CF3

FV: 0

My benefit was $14,155.99 - my cost of $7,320.00 = $6,835.99.

My answer is incorrect.  What am i doing wrong?

 

Expert Solution
Check Mark
Step 1

cash flow according to the question

Finance homework question answer, step 1, image 1

NPV=∑tCFt1+rt

where,

CFt= cashflow at time t

r = rate

t = time period of cashflow

bartleby

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