Question
Assume that the firm invests $115,000 today to get $15,000 at Year 1 (i.e. one year from now), $24,000 at Year 2, $46,000 at Year
Assume that the firm invests $115,000 today to get $15,000 at Year 1 (i.e. one year from now), $24,000 at Year 2, $46,000 at Year 3, $55,000 at Year 4, $18,500 at Year 5, $25,500 at Year 6. Whats the Net Present Value of this investment? Assume the Interest (discount) rate of 10.3%.
A.) $15,056.24
B.) $12.425.25
C.) $14,256.25
D.) $15,256.65
How would your answer from the question above change if:
1) The money made beginning at Year 1 would increase by 10% each year (for example, $15,000 made under the default scenario now increases to $15,000 X 1.1 = $16,500), and
2) The discount rate goes up from 10.30% to 10.45%.
Note: Assume the amount of initial investments remain the same at $115,000.
A.) $28,282.32
B.) $27,617.18
C.) $16,782.32
D.) $16,617.18
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