- An investment produces a cash flow of $420 in year 1, $137 in year 2, and $797 in year 3. If the required rate of return is 15%, what price should you pay for the investment at time zero?
- Which cash flow would you rather pay, $250 today or $300 in three years if interest rates are 9 percent?
- A project has an initial cost of $300,000, expected net cash inflows of $67,500 per year for 7 years, and a cost of capital of 11%. What is the project’s NPV?
- Suppose you need to have $54,193 in an account 16 years from today and that the account pays 7%. How much do you have to deposit into the account 1 year from today?
- Assume the real rate of interest is 4% and the inflation rate is 5%. What is the value today of receiving 13,800 in 11 years?