Hey! Sign in to get help with your study questionsNew here? Join for free to post

# Net Present Value

Announcements Posted on
Last day to win £100 of Amazon vouchers - don't miss out! Take our quick survey to enter 24-10-2016
1. Can anyone help me answer this question?
Suppose an investment opportunity with a cash flow of \$3000 each year for the first 3 years, and \$2000 from year 4 in perpetuity. With initial investment of \$18000. What is the NPV of the investment if r=10% ?

I know that you have to derive the first 3 years and then at year 3 using the formula C/r, then derive the PV. But i still get the wrong answer.
Help? ;S
2. (Original post by adusiiaa0069)
Can anyone help me answer this question?
Suppose an investment opportunity with a cash flow of \$3000 each year for the first 3 years, and \$2000 from year 4 in perpetuity. With initial investment of \$18000. What is the NPV of the investment if r=10% ?

I know that you have to derive the first 3 years and then at year 3 using the formula C/r, then derive the PV. But i still get the wrong answer.
Help? ;S
I've moved this to the Accounting and finance study help forum
3. (Original post by adusiiaa0069)
Can anyone help me answer this question?
Suppose an investment opportunity with a cash flow of \$3000 each year for the first 3 years, and \$2000 from year 4 in perpetuity. With initial investment of \$18000. What is the NPV of the investment if r=10% ?

I know that you have to derive the first 3 years and then at year 3 using the formula C/r, then derive the PV. But i still get the wrong answer.
Help? ;S
Still need help with this question?

Remember that the perpetuity itself needs to be discounted back to year 1 - this is where you are most likely going wrong.

Write a reply…

Submit reply

## Register

Thanks for posting! You just need to create an account in order to submit the post
1. this can't be left blank
that username has been taken, please choose another Forgotten your password?
2. this can't be left blank
this email is already registered. Forgotten your password?
3. this can't be left blank

6 characters or longer with both numbers and letters is safer

4. this can't be left empty
your full birthday is required
1. Oops, you need to agree to our Ts&Cs to register
2. Slide to join now Processing…

Updated: April 7, 2016
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

This forum is supported by:
Today on TSR

### How does exam reform affect you?

From GCSE to A level, it's all changing

Poll
Useful resources

## Make your revision easier

Can you help? Study help unanswered threadsStudy Help rules and posting guidelines

## Groups associated with this forum:

View associated groups
Study resources

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.