# Net Present Value and Discount Rate Assignment

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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? [pic] 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? [pic] A. 2. 00 years B. 2. 05 years C. 2. 30 years D. 2. 64 years E. 2. 94 years 4. Deep South Sounds would like to spend \$189,000 for new sound equipment. However, the company has a major loan maturing 3 years from today and needs this money at that time to avoid bankruptcy.

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