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Question1 Supposeyouinvested$10,000fortenyearsatanominalrateof7%peryear.Iftheannualrateofinflationwas3%,whatwastherealvalueofyourinvestmentattheendoftenyears? $19,671 $14,802 $14,637 $13,439 Questiontwo TheNPVofaninvestmentmadetodayis$10,000.Ifpostponedforoneyear,theNPVatthattimewillincreaseby$1,000.Whichofthefollowingiscorrectiftheopportunitycostofcapitalis12%? Postpone; the NPV increases by a positive amount. Postpone; the NPV will be larger. Invest now; the
- Question1
- Supposeyouinvested$10,000fortenyearsatanominalrateof7%peryear.Iftheannualrateofinflationwas3%,whatwastherealvalueofyourinvestmentattheendoftenyears?
- $19,671
- $14,802
- $14,637
- $13,439
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- Questiontwo
- TheNPVofaninvestmentmadetodayis$10,000.Ifpostponedforoneyear,theNPVatthattimewillincreaseby$1,000.Whichofthefollowingiscorrectiftheopportunitycostofcapitalis12%?
- Postpone; the NPV increases by a positive amount.
- Postpone; the NPV will be larger.
- Invest now; the NPV does not grow at a sufficient rate.
- Invest now; always accept positive NPV projects.
-
- Question3
- ProjectY-Filehasthefollowingcashflows:C0=+1500,C1=-1,000,andC2=-1,000.IftheIRRoftheprojectis21.5%andifthecostofcapitalis15%,youwould:
- Accept the project.
- Reject the project.
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- Question4
- Considertwomutuallyexclusiveprojectswiththefollowingcashflows:
- Projects012
- A-400+241+293
- B-200+131+172
- ChooseaprojectusingtheIRRrule.Theopportunitycostofcapitalis9%.(Youmustshowallworkinalegibleandorderlymanner)
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