Question

year from now $150.000 12. A compy is considering an opportunity that requires an investment of $1.500.000 today and will provide $350,000 two years from now, and 5630,000 three years from now. If the appropriate interest rate is 15% then the company should: A) invest in this opportunity since the NPV is positive B) not invest in this opportunity since the NPV is positive C) invest in this opportunity since the NPV is negative D) not invest in this opportunity since the NPV is negative Next • Previous No new data to save Last checked at 12:45pm Submit Quiz о вi ge 90 8 -R TY

Answer 1

Year	Cashflow	PVF @ 15%	PV
0	-1,500,000.00	1.0000	-1,500,000.00
1	350,000.00	0.8696	304,347.83
2	450,000.00	0.7561	340,264.65
3	630,000.00	0.6575	414,235.23
		NPV	-441,152.30

Therefore option D is correct.

Question 18:

Monthly payment to buy the truck = $878

No of monthly payments to be made (N) = 60

Payment to be made if Truck if bought from dealer, that is present value of truck (PV) = (-$35,620)

Therefore monthly interest rate of monthly payment scheme = ?

Using financial calculator or RATE function in excel,

Monthly interest rate of monthly payment scheme = 1.385% p.m equivalent to 16.6% p.a.

Therefore option D is correct.

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