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QUESTION 1 Consider an investment that will cost $25,000 and generate the following stream of cash...

QUESTION 1

Consider an investment that will cost $25,000 and generate the following stream of cash flows in the future:  

year $

1 6,500

2 6,500

3 10,000

4 12,000

5 12,000

What is the net present value of this investment using an 18 percent discount rate?

  1. $22,000
  2. $27,698
  3. $2,698
  4. -$5,007

QUESTION 2

What is the internal rate of return of an investment with the following cash flows?

year $

0 (2,000)

1 400

2 400

3 400

4 500

5 500

10.0%

3.1%

-39.0%

0.0%

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