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1) An initial investment in a business costs $95,000. The business has expected cash flows of $30,000, $40,000, $45,000 in years 1-3. If the discount
1) An initial investment in a business costs $95,000. The business has expected cash flows of $30,000, $40,000, $45,000 in years 1-3. If the discount rate is 5%, what is the NPV? What if the discount rate is 8%? 2) A company wants to see if a project is worthwhile. It will cost them $290,000 to start. For five years, the project should increase cash flow by $75,000 a year. If the company uses a discount rate (cost of capital) of 12%, should they start the project
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