What is the net present value of the investment assuming a discount rate of 13%?

Question

Quizplus · Accepted Answer

The net present value of the investment is the sum of the present values of all the cash flows, discounted at the given discount rate. The present value of a cash flow is the amount of money that would have to be invested today to produce the same cash flow in the future, given the discount rate.In this case, the cash flows are $10,000 in year 1, $15,000 in year 2, and $20,000 in year 3. The discount rate is 13%.The present value of the cash flow in year 1 is $10,000 / (1 + 0.13)^1 = $8,849.56.The present value of the cash flow in year 2 is $15,000 / (1 + 0.13)^2 = $12,881.02.The present value of the cash flow in year 3 is $20,000 / (1 + 0.13)^3 = $14,196.50.The net present value of the investment is the sum of the present values of the cash flows, which is $8,849.56 + $12,881.02 + $14,196.50 = $35,706.

What Is the Net Present Value of the Investment Assuming