chapter 8

Student: ___________________________________________________________________________

1.What is the net present value of a project with the following cash flows if the discount rate is 14 percent?

A.-$3,140.43

B.-$929.90

C.$247.181

D.$1,027.67

E.$1,127.08

2.Timothy is considering an investment of $10,000. This investment is supposedly going to provide him with cash inflows of $2,500 in the first year and $6,000 a year for the following 2 years. At a discount rate of zero percent this investment has a net present value (NPV) of _____, but at the relevant discount rate of 18 percent the project's NPV is:

A.-$1,500; $62.03.

B.-$1,500; $79.54.

C.$4,500; $62.03.

D.$4,500; $79.54.

E.$6,000; $98.48.

3.A project has the following cash flows. What is the payback period?

A.2.00 years

B.2.05 years

C.2.30 years

D.2.64 years

E.2.94 years