Gamma Company is considering an investment proposal that would require an initial outlay of $800,000, and would yield yearly cash flows of $200,000 for 9 years. The company uses a discount rate of 10%. What is the NPV of the investment?

$350,000

$400,000

$351,000

$250,000

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The NPV method of evaluating capital investments suggests that a project with positive net cash inflows that exceed the cost of the investment should be accepted.

True False

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Zane has received a prize which entitles him to receive annual payments of $10,000 for the next 10 years. Which of the following is to be referred to in order to calculate the total value of the prize today?

Present Value of $1

Present Value of an Annuity of $1

Future Value of $1

Future Value of an Annuity of $1

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Paramount Company is considering purchasing new equipment costing $700,000. Company's management has estimated that the equipment will generate cash flows as follows.

The company's required rate of return is 9%. Using the factors in the table, calculate the present value of the cash flows.

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An annuity refers to a series of equal cash flows received or paid annually.

True False

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If $15,000 is invested annually in an account with 9% interest compounding yearly, what will the balance of the account be after five years? Refer to the following Future Value table:

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Which of the following two methods are typically used for initial screening of investments, rather than for detailed, in-depth analysis?

Net present value and Payback

Internal rate of return and Net present value

Accounting rate of return and Net present value

Payback and Accounting rate of return