You are considering the purchase of an investment that would pay
you $10,000 per year for Years 1
and 2, $8,000 per year for Years 3 and 4, and $6,000 per year for
Years 5 and 6. If you require a 15 percent
rate of return, and the cash flows occur at the end of each year,
how much would you be willing to pay for
this investment? In other words, what is the NPV of these cash
flows?
a. $22,223
b. $31,668
c. $35,942
d. $36,419
e. some other number
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