QUESTION $3$

$6$ points

Your firm is considering investing in a project that costs $$100,000$ today and will produce a cash flow of $$108,000$ at the end of the year. Suppose the market interest rate is $10\%.$

a$.$ What is the present value $($PV$)$ of $$108,000$ to be received after a year?

b$.$ What is NPV of the investment?

c$)$ Is this investment profitable?

$PV=$ Cashflow$/(1+r)$

$NPV=PV-$ initial cost