Question

You are considering a project which has $35,000 set up costs and produces revenue of $15,000...

You are considering a project which has $35,000 set up costs and produces revenue of $15,000 in year 1, $20,000 in year 2, and $18,000 in year 3. The interest rate is 15%. What is the NPV of this project?

a.

$4,253.27
b.

$5,001.64
c.

$5,574.19
d.

None of these

Consider the project discussed in the previous question. Suppose that the interest rate is r=.08. What is the NPV of this project?

a.

$5,976.52
b.

$10,324.64
c.

$15,211.46
d.

None of these

A project costs $8,000to set up, and yields $10,000 of revenue at the end of the year. What is the IRR (internal rate of return) of this project?

a.

15%
b.

20%
c.

25%
d.

None of these
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