This Question: 3 pts 2013(o complete) This Quiz: 10 pts possible s the investmen

Question

This Question: 3 pts 2013(o complete) This Quiz: 10 pts possible s the investment, it will pay $4,000 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,000 plus an additional investment at the end ofthe second year of $5,000, what is the NPV of this opportunity if the interest rate is 2 0% per year? Should Marian take it? what is the NPV of this opportunity if the interest rate is 2.0% per year? The NPV of this opportunity is S(Round to the nearest cent.) Should Marian take it? 1 take this opportunity. (Select from the drop-down menu.) should not should your answer in the answer box.

Explanation / Answer

Years Cash Outflow Cash Inflow Net Cash Flow PVF @ 2% Present Value 0 $           -1,000.00 -$1,000                          1.000 -$1,000 1 $4,000 $4,000                          0.980 $3,922 2 $           -5,000.00 $4,000 -$1,000                          0.961 -$961 3 $4,000 $4,000                          0.942 $3,769 TOTAL $5,730 Answer =1) NPV of this opportunity = $ 5730 Answer = 2) Marian should take this opportunity

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