PRACTICE MIDTERM QUESTION
In order to avoid plagiarism, you will be required to name at least one of your variables with
your initials. For example, one of my variables would be named “mk”. Same policy applies to
your midterm exam.
Dunder Sacramento is a paper company considering three mutually exclusive projects. All three
projects have the same risk, and the cost of capital is 7 percent for all projects.
Project Name Initial Investment Year 1 Year 2 Year 3
Alpha -20 4 8 12
Beta -13 6 5.5 4.5
Gamma -10 3.33 3.33 3.33
Assume you have the capacity to take on all three projects, however you are only willing to pick 1 of
the three.
Required:
You are required to calculate net present value of all three projects by:
a.) Defining a NPV function.
b.) Using a loop to iterate through each year.
c.) Print the output of each project showcasing the NPV of each of them and automating a
recommendation based on the output of the function.
1. You can either use a global variable or return from the function to accomplish this.
2. Your print statement should be dynamic and not hard coded.
3. You are recommended to use if/else operators; however, it is not required.
4. Your NPV amount should be presented as 2 decimal places even if it is a whole
number. For example, “10” will be shown as “10.00”.
There are no requirements for you to submit this question, however you can email me if:
– you want me to check your work.
– you get stuck somewhere
– if any requirement is not clear.
Email: mohit.