Assume that the firm invests $120,000 today to get $20,000 at Year 1 (i.e. one year from
Question:
Assume that the firm invests $120,000 today to get $20,000 at Year 1 (i.e. one year from now), $21,000 at Year 2, $22,000 at Year 3, $23,000 at Year 4, $50,000 at Year 5, $45,000 at Year 6. Whats the Net Present Value of this investment? Assume the Interest (discount) rate of 10.35%.
A.) $2,731.28
B.) $21,255.24
C.) $5,315.24
D.) $1,259.24
Same facts as above, except that we now assume the future cash inflows (that is, the money made from Year 1 to Year 6) will increase by 15%, and that the discount rate will decrease to 10.25%. What is the new NPV?
A.) $1,259.24
B.) $21,627.94
C.) $2,731.28
D.) We do not have sufficient information to answer this question.
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman