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.

Answer rating: 100% (QA)

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