10:42 4 ELTE Assignment 3 An investment costs $1548 and pays $138 in perpetuity. If the rate of interest is 9%, what is the NPV of the investment? $18.98 b Negative $14.67 Negative $16.67 $0 d Question 5 (10 points) The W.A.C.C. is a: a Non-stochastic discount rate under all circumstances Simple opportunity cost metric Composite opportunity cost metric Risk-adjusted discount rate under all circumstances d Question 6 (10 points) At a crossover rate of return, two or more streams of Net Present Values are: Flows with equal internal Rates of Return b Equalized Flows with negative Internal Rates of Return d Discontinuous fOX 10:42 LTE f Assignment 3 Question pomy The M.I.R.R. is based on a b Cash flows being reinvested at the IRR. Cash flows being reinvested at the WACC or a comparable rate. Cash flows being reinvested at the YTM on treasury bonds Cash flows being reinvested at a rate always different from WACC d Question 2 (10 points) An investment of $232 will produce $312.18 in 2 years. What is the Annual Rate of Interest? 36% b 16% 20% d 2496 Question 3 (10 points) Flotation costs are incurred in the : Preferred equity market only b Secondary capital market Primary capital market Bond market only c d FOX