Answered: Assuming an interest rate of 5%, which… | bartleby

Financial Management: Theory & Practice

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1MC

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Question

Year
0
1
3
4
5
6
-Assuming an interest rate of 5%, which three cash flows have the best
Net Present Value? (Remember to show your work!):
Estimated Response Time for Average Student: 2 minutes)
a. Cash Flows C, D, and F
b. Cash Flows A, E, and D
c. Cash Flows D, E, and F
d. Cash Flows D, F, and G
e. Cash Flows D, E, and G
-Assuming an interest rate of 5%, which three cash flows have the best
Equivalent Uniform Annual Worth (EU AW)? (Remember to show your work!):
(Estimased Response Time for Average Student: 2 minutes)
a. Cash Flows A, D, and G
b. Cash Flows C, D, and E
c. Cash Flows B, C, and F
d. Cash Flows E, F, and G
e. Cash Flows C, E, and F
B
A
($75,000) $75,000)
$15,000
$0
$15,000
$0
$15,000
$15,000
$15,000
C
($75,000)
D
$75,000)
$0
$50,000
$0
$25,000
$27,000
$10,000
$15,000 $54,000 $5,000 $105,000
$0
$0
E
($75,000)
$5,000
$5,000
$5,000
$5,000
$72,500
$2,500
I
F
00)
$37,750
$5,000
$0
$0
$5,000
$37,750
G
($75,000)
$0
$52,750
$27,750
$0
$0
$10,000

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