what is the answer with work shown and using a formula? E. At a personal level,

Question

what is the answer with work shown and using a formula?

E. At a personal level, individuals do not need to manage the risks associated with financial decisions. Q11. An investment opportunity requires an initial investment of $25.000. If you make this oday, you will receive a cash flow of $8,000 at the end of each of the next ars. Assuming you require a return of 14% on this investment. what is its net nves present value? $ 9.596.68 B. 3.746.72 C. +S 2.464.65 D. +$ 3.746.72 E. +S27.880.83 Q12. You are contemplating borrowing $10.000 to remodel your kitehen via a signature loan. Tlhe loan will be repaid in one payment at the end of one year. What is the effective interest cost of the loan terms you prefer from the choices belou? A year

Explanation / Answer

NPV = 2,464.65 (last entry of the cumulative cash flow)

Discount rate 14.0000% Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow            (25,000.000) 0                           (25,000.00)                       (25,000.00)                8,000.000 1                               7,017.54                       (17,982.46)                8,000.000 2                               6,155.74                     (11,826.716)                8,000.000 3                               5,399.77                          (6,426.94)                8,000.000 4                               4,736.64                          (1,690.30)                8,000.000 5                               4,154.95                            2,464.65

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