5. Assume that the investment involves an initial outlay of $100,000 with a five-year useful life and no salvage value under straight-line depreciation. The revenues are as follows: Year 1 - $10,000, Year 2 - $20,000, Year 3 - $30,000, Year 4 - $40,000 and Year 5 - $50,000.

Use the minus sign to indicate a net loss.

6. Which of the following is required to compute the NPV of a project?

1. Cost of the project
2. Life of the project
3. Required rate of return
4. All of these choices are correct.

7. Net present value is calculated by:

1. (Present value of projects future cash inflows) (Present value of the projects cost)
2. (Present value of the projects cost) (Present value of projects future cash inflows)
3. (Present value of the project) (Required return on the investment)
4. (Present value of the projects future cash inflows) (Present value of the projects cost) + (Required return)

8. When should the decision of accepting a project be taken?

1. When the net present value of the project is positive.
2. When the net present value of the project is negative.
3. When the net present value of the project is neither positive nor negative.
4. Both "When the net present value of the project is positive" and "When the net present value of the project is neither positive nor negative" are correct.

9. The built-in function in Microsoft Excel PV (________) returns a present value for the cash inflows equal to $57,559.70.

1. (12%, 6, 14000)
2. (12%, -6, 14000)
3. (-12%, 6, 14000)
4. (12%, 6, -14000)

Year Revenues Expenses Net Income Year 1 Net Income (loss) $1 Year 2 Net Income (loss) = = Year 3 Net Income (loss) = = Year 4 Net Income (loss) = = Year 5 Net Income (loss) = = Total Net Income (five years) = $ II Average Net Income Average Rate of Return = %