The Net Present Value of a Stream of Cash Flow
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The Net Present Value of a Stream of Cash Flow
11. You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1500 two years from now, and $10,000 ten years from now.
a) What is the NPV of the opportunity if the interest rate is 6% per year? Should you take the opportunity?
b) What is the NPV of the opportunity if the interest rate is 2% per year? Should you take it now?
16. What is the present value of $1000 paid at the end of each of the next 100 years if the interest rate is 7% per year?
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The Net Present Value of a Stream of Cash Flow
11. You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1500 two years from now, and $10,000 ten years from now.
a) What is the NPV of the opportunity if the interest rate is 6% per year? Should you take the opportunity?
NPV is calculated by finding the present value of each cash flow, including both cash inflows and ...
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