# A project will produce cash inflows of $1,750 a year for four years

## Question: A project will produce cash inflows of $1,750 a ye…

A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 13.75%?

-$5,474.76

-$1,011.40

-$935.56

$1,011.40

5,474.76

It will cost $3,000 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?

.83 years

1.14 years

1.83 years

2.14 years

2.83 years

Find the present value of $5,325 to be received in one period if the rate is 6.5%.

$5,000.00

$5,023.58

$5,644.50

$ 5,671.13

None of these

What is the future value of $2,400 a year for three years at an 8% rate of interest?

$6,185.03

$6,847.26

$7,134.16

$7,791.36

$8,414.67

The time value of money concept can be defined as: ________ the relationship between the supply and demand of money OR, the relationship between money spent versus money received OR, the relationship between a dollar to be received in the future and a dollar today OR, the relationship between interest rate stated and amount paid OR, None of these.

The interest rate expressed in terms of the interest payment made each period is called the _____ rate: Stated annual interest OR, compound annual interest OR, effective annual interest OR, Periodic Interest, OR daily interest

An annuity stream where the payments occur forever is called a (n) _______: annuity due OR, indemnity OR, perpetuity OR, amortized cash flow stream OR, amortization table

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