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Math Help - Calculate the N.P.V

  1. #1
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    Calculate the N.P.V

    hi, how are u guys

    don`t really know how to bit that
    checked some posts before, but still nothing
    can someone take a look pls

    An investment costing 50 000 will generate year end returns of 7000 for 10 years. Calculate the N.P.V using a discount rate of 4 % per annum.
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  2. #2
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    Quote Originally Posted by kaluznikow View Post
    An investment costing 50 000 will generate year end returns of 7000 for 10 years. Calculate the N.P.V using a discount rate of 4 % per annum.
    Please learn to use "Basic Principles". I beg you.

    If i = 0.04, then v = 1/(1+i) = 1/1.04

    N.P.V. = -50000 + 7000(v + v^{2} + v^{3} + ... + v^{10}) = -50000 + 7000\left(\frac{v - v^{11}}{1-v}\right)

    You can simplify that a little more if you like.
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