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Document1 Word Mailings Review View Tell me what you want to do. A- !.2. Normal 11 No Spac Heading i Heading Title - Paragraph Styles
Document1 Word Mailings Review View Tell me what you want to do. A- !.2. Normal 11 No Spac Heading i Heading Title - Paragraph Styles Today a two-year investment of $ 200 is made at an annual interest rate of 6%, which of the following statements is true? A) The PV is $ 178.00. B) The FV is $ 224.00. C) The FV is $ 224.72. D) This question is irrelevant because there are no investments of two years that earn an average of 6% per year. 3) You are saving money for a down payment on a new house. You intend to place $ 5,000 at the end of each year for three years in an account that earns 6% per year. At the end of the fourth year, you will place $ 10,000 in this account. How much money will be in the account at the end of the fourth year? A) $ 26,873.08 B) $ 26,518.17 c) $ 25,918.0o D) $ 25,000.00 4) You invest $ 15,000 today, compounded monthly, with an annual interest rate of 8.25%. How much interest will you earn in a year? A) $ 1,285.38 B) $ 1,295.38 C) $ 1,298.98 D) $ 1.723.23 5) Geronimo, Inc. is considering a project that has an initial outlay after taxes or an after-tax cost of $ 220,000. The respective future cash flows of your four-year project for years 1 through 4 are: $ 50,000, $ 60,000, $ 70,000 and $ 80,000. Geronimo uses the net present value method and has a discount rate of 11%. Will Geronimo accept the project? A) Geronimo accepts the project because the NPV is greater than $ 10,000.00. e) Geronimo rejects the proft because the NPV is approximately $ 22,375.73. C) Geronimo rejects the project because the NPV is approximately $ 12,375.60. D) Geronimo rejects the project because the NPV is approximately $ 2,375.60. 6) Lennon, Inc. s considering a five-year project that has an initial outlyor cost of s 80,000 The respective future cash inflows of your project for years 1, 2, 3, 4 and 5 are:$ 15,000, $ 25,000, $ 35,000 $ 45,000 and $ 55,000. Lennon uses the internal rate of return method to evaluate projects. What Lennon's IRR? A) The IRR is lower than 22.50%. B) The IRR is approximately 24.16%. C) The IRR is approximately 26.16%. D) The IRR is greater than 26.50%. 7) Name and describe three problems that may affect the incremental cash flow of a new project) (Ctr)
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