Principles of Corporate Finance

Present Values

Example - continued

Assume that the cash flows from the construction and sale of an office

building is as follows. Given a 7% required rate of return, create a

present value worksheet and show the net present value.

( )

$ 18 , 400

2. 
   

   873 300 , 000 261 , 900

   
   


3. 
   

   935 100 , 000 93 , 500

   
   

0 1. 0 150 , 000 150 , 000

Value

Present

Flow

Cash
Factor
Period Discount

1. 071 2

1.^107

= =

= + +

= − −

− −

NPV Total