Net Present Value Calculation: Annual Cash Flows at 15% Interest Rate | CFA Level 1 Exam Prep

Net Present Value Calculation

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Question

What is the Net Present Value of this series of annual cash flows using an interest rate of 15% per year: Year 0: <$10,000>, Year 1: $5,000, Year 2: $5,000, Year

3: $7,500? (Note that the <> are used to indicate a negative number).

Answers

Explanations

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A. B. C. D. E.

C

On the BAII Plus, press CF 2nd CLRWork 10000 +/- ENTER DownArrow 5000 ENTER DownArrow DownArrow 5000 ENTER DownArrow DownArrow 7500

ENTER DownArrow DownArrow 2nd Quit. Then press NPV 15 ENTER DownArrow CPT. On the HP12C, press these keys: 10000 CHS BlueShift CFo 5000

BlueShift CFj 5000 BlueShift CFj 7500 BlueShift CFj Then press 15 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard.

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