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Consider the following two projects and their respective cash flow profile of net benefits:
Table 1: Net Cash flows of Benefits for Project 1
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Net benefits | -500 | 450 | 500 | 520 | 600 | 650 | 700 | 800 | 200 |
Table 2: Net Cash flows of Benefits for Project 2
| Year | 4 | 5 | 6 | 7 | 8 | 9 |
| Net benefits | -400 | 150 | 200 | 300 | 400 | 150 |
Assume that the interest rate in Year 1 is 11% and that it will decline by 1% every year until Year 6 and thereafter stay constant.
By discounting the net benefits, calculate the net present values (NPV) of project 1 as of Year 1, 3 and 7,
Find the net present values (NPV) of project 2 as of Year 1, 4 and 6.
Again, assume that the interest rate in Year 1 is 1% and that it will increase by 1% every year until Year 6 and thereafter stay constant.
By discounting the net benefits, calculate the net present values (NPV) of project 1 as of Year 1, 3 and7,
Find the net present values of project 2 as of Year 1, 4 and 6.
Compare the results in questions 1 and 2 above
Could you please show computing steps in Excel, because i can't understand where i got issues on my calculations.
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