Net Present Value - Coursework Example

Net Present Value Learner’s Affiliated institute Net Present Value Initial investment 600,000  Duration = 5 years Rate = 10%Cash flow:Year 1: $380,000Year 2: $390,000Year 3: $400,000Year 4: $410,000Year 5: $420,000Net Present Value: -$1,598,490.88PV of Expected Cash Flows: $1,509.12Discussion At a rate of 10.00% and for a period of 5 years, the projected cash flows are worth $1,509.12 today, which is less than the initial $1,600,000.00. The NPV of the project is -$1,598,490.88, which implies that, the project is not likely to receive the expected return at the end of the project.

For this reason, pursuing this project may not be an optimal decision.However, despite the fact that, the projected capital project resulted in a negative NPV value, it may still be beneficial engaging. One of the factors that may increase NPV of a project is the valuation of real options. For instance, projects such as research and development are risky to venture. As a result od that, the returns from such projects cannot be guaranteed. However, if the projects are successful, their payoff are usually very high.

As an Alternately, it is also possible that the NPV is negative, with the reason being that, the required return rate is unrealistically high. It may also be the case if the projected cash flow is too conservative.LOAN AMORTIZATION SCHEDULELoan Summary$1,600,000 for 10 years with a 6% interest rate$17,763.28Monthly Payment$2,131,593.64Total of 120 PaymentsMar, 2025Payoff DateLoan Amortization ScheduleDateInterestPrincipalBalanceApr, 2015$8,000.00$9,763.28$1,590,236.72May, 2015$7,951.18$9,812.

10$1,580,424.62Jun, 2015$7,902.12$9,861.16$1,570,563.47Jul, 2015$7,852.82$9,910.46$1,560,653.00Aug, 2015$7,803.27$9,960.02$1,550,692.99Sep, 2015$7,753.46$10,009.82$1,540,683.17Oct, 2015$7,703.42$10,059.86$1,530,623.31Nov, 2015$7,653.12$10,110.16$1,520,513.14Dec, 2015$7,602.57$10,160.71$1,510,352.432015$70,221.95$89,647.57$1,510,352.43Jan, 2016$7,551.76$10,211.52$1,500,140.91Feb, 2016$7,500.70$10,262.58$1,489,878.34Mar, 2016$7,449.39$10,313.89$1,479,564.45Apr, 2016$7,397.82$10,365.46$1,469,198.

99May, 2016$7,345.99$10,417.29$1,458,781.70Jun, 2016$7,293.91$10,469.37$1,448,312.33Jul, 2016$7,241.56$10,521.72$1,437,790.61Aug, 2016$7,188.95$10,574.33$1,427,216.29Sep, 2016$7,136.08$10,627.20$1,416,589.09Oct, 2016$7,082.95$10,680.33$1,405,908.75Nov, 2016$7,029.54$10,733.74$1,395,175.02Dec, 2016$6,975.88$10,787.41$1,384,387.612016$87,194.54$125,964.82$1,384,387.61Jan, 2017$6,921.94$10,841.34$1,373,546.27Feb, 2017$6,867.73$10,895.55$1,362,650.72Mar, 2017$6,813.25$10,950.03$1,351,700.69Apr, 2017$6,758.50$11,004.78$1,340,695.

92May, 2017$6,703.48$11,059.80$1,329,636.11Jun, 2017$6,648.18$11,115.10$1,318,521.01Jul, 2017$6,592.61$11,170.68$1,307,350.34Aug, 2017$6,536.75$11,226.53$1,296,123.81Sep, 2017$6,480.62$11,282.66$1,284,841.15Oct, 2017$6,424.21$11,339.07$1,273,502.08Nov, 2017$6,367.51$11,395.77$1,262,106.31Dec, 2017$6,310.53$11,452.75$1,250,653.562017$79,425.31$133,734.05$1,250,653.56Jan, 2018$6,253.27$11,510.01$1,239,143.54Feb, 2018$6,195.72$11,567.56$1,227,575.98Mar, 2018$6,137.88$11,625.40$1,215,950.58Apr, 2018$6,079.75$11,683.53$1,204,267.

05May, 2018$6,021.34$11,741.95$1,192,525.11Jun, 2018$5,962.63$11,800.65$1,180,724.45Jul, 2018$5,903.62$11,859.66$1,168,864.80Aug, 2018$5,844.32$11,918.96$1,156,945.84Sep, 2018$5,784.73$11,978.55$1,144,967.29Oct, 2018$5,724.84$12,038.44$1,132,928.84Nov, 2018$5,664.64$12,098.64$1,120,830.21Dec, 2018$5,604.15$12,159.13$1,108,671.082018$71,176.89$141,982.48$1,108,671.08Jan, 2019$5,543.36$12,219.92$1,096,451.15Feb, 2019$5,482.26$12,281.02$1,084,170.13Mar, 2019$5,420.85$12,342.43$1,071,827.70Apr, 2019$5,359.14$12,404.14$1,059,423.

56May, 2019$5,297.12$12,466.16$1,046,957.40Jun, 2019$5,234.79$12,528.49$1,034,428.90Jul, 2019$5,172.14$12,591.14$1,021,837.77Aug, 2019$5,109.19$12,654.09$1,009,183.67Sep, 2019$5,045.92$12,717.36$996,466.31Oct, 2019$4,982.33$12,780.95$983,685.36Nov, 2019$4,918.43$12,844.85$970,840.51Dec, 2019$4,854.20$12,909.08$957,931.432019$62,419.72$150,739.65$957,931.43Jan, 2020$4,789.66$12,973.62$944,957.81Feb, 2020$4,724.79$13,038.49$931,919.32Mar, 2020$4,659.60$13,103.68$918,815.63Apr, 2020$4,594.08$13,169.

20$905,646.43May, 2020$4,528.23$13,235.05$892,411.38Jun, 2020$4,462.06$13,301.22$879,110.16Jul, 2020$4,395.55$13,367.73$865,742.43Aug, 2020$4,328.71$13,434.57$852,307.86Sep, 2020$4,261.54$13,501.74$838,806.12Oct, 2020$4,194.03$13,569.25$825,236.87Nov, 2020$4,126.18$13,637.10$811,599.78Dec, 2020$4,058.00$13,705.28$797,894.502020$53,122.43$160,036.94$797,894.50Jan, 2021$3,989.47$13,773.81$784,120.69Feb, 2021$3,920.60$13,842.68$770,278.01Mar, 2021$3,851.39$13,911.89$756,366.12Apr, 2021$3,781.83$13,981.

45$742,384.67May, 2021$3,711.92$14,051.36$728,333.31Jun, 2021$3,641.67$14,121.61$714,211.70Jul, 2021$3,571.06$14,192.22$700,019.48Aug, 2021$3,500.10$14,263.18$685,756.30Sep, 2021$3,428.78$14,334.50$671,421.80Oct, 2021$3,357.11$14,406.17$657,015.63Nov, 2021$3,285.08$14,478.20$642,537.42Dec, 2021$3,212.69$14,550.59$627,986.832021$43,251.70$169,907.67$627,986.83Jan, 2022$3,139.93$14,623.35$613,363.48Feb, 2022$3,066.82$14,696.46$598,667.02Mar, 2022$2,993.34$14,769.95$583,897.08Apr, 2022$2,919.49$14,843.

79$569,053.28May, 2022$2,845.27$14,918.01$554,135.27Jun, 2022$2,770.68$14,992.60$539,142.66Jul, 2022$2,695.71$15,067.57$524,075.10Aug, 2022$2,620.38$15,142.90$508,932.19Sep, 2022$2,544.66$15,218.62$493,713.57Oct, 2022$2,468.57$15,294.71$478,418.86Nov, 2022$2,392.09$15,371.19$463,047.67Dec, 2022$2,315.24$15,448.04$447,599.632022$32,772.17$180,387.20$447,599.63Jan, 2023$2,238.00$15,525.28$432,074.35Feb, 2023$2,160.37$15,602.91$416,471.44Mar, 2023$2,082.36$15,680.92$400,790.52Apr, 2023$2,003.95$15,759.

33$385,031.19May, 2023$1,925.16$15,838.12$369,193.07Jun, 2023$1,845.97$15,917.31$353,275.75Jul, 2023$1,766.38$15,996.90$337,278.85Aug, 2023$1,686.39$16,076.89$321,201.96Sep, 2023$1,606.01$16,157.27$305,044.69Oct, 2023$1,525.22$16,238.06$288,806.64Nov, 2023$1,444.03$16,319.25$272,487.39Dec, 2023$1,362.44$16,400.84$256,086.542023$21,646.28$191,513.09$256,086.54Jan, 2024$1,280.43$16,482.85$239,603.70Feb, 2024$1,198.02$16,565.26$223,038.44Mar, 2024$1,115.19$16,648.09$206,390.35Apr, 2024$1,031.95$16,731.

33$189,659.02May, 2024$948.30$16,814.99$172,844.03Jun, 2024$864.22$16,899.06$155,944.97Jul, 2024$779.72$16,983.56$138,961.42Aug, 2024$694.81$17,068.47$121,892.94Sep, 2024$609.46$17,153.82$104,739.13Oct, 2024$523.70$17,239.58$87,499.54Nov, 2024$437.50$17,325.78$70,173.76Dec, 2024$350.87$17,412.41$52,761.352024$9,834.17$203,325.19$52,761.35Jan, 2025$263.81$17,499.47$35,261.88Feb, 2025$176.31$17,586.97$17,674.91Mar, 2025$88.37$17,674.91$0.002025$528.49$52,761.35$0.00ReferenceInvestopedia,. (2015).

 Net Present Value Calculator | Investopedia. Retrieved 26 April 2015, from http://www.investopedia.com/calculator/netpresentvalue.aspx