Figure 14-6. Present Value of $1

question 8

Multiple Choice

Figure 14-6. Present value of $1
Present value of an Annuity of $1
Refer to Figure 14-6.Roman Knoze is considering two investments.Each will cost $20,000 initially.Project 1 will return annual cash flows of $10,000 in each of three years.Project 2 will return $5,000 in year 1,$10,000 in year 2,and $15,000 in year 3.Roman requires a minimum rate of return of 10 percent.What is the net present value of Project 2?

• A)$5,670
• B)$20,000
• C)$2,530
• D)$24,070
• E)$4,070

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Definitions:

Rhinitis

Inflammation of the nasal mucous membrane, leading to symptoms such as a runny nose, sneezing, and nasal itching.

Muscle Layers

Groups of muscles arranged one on top of another within the body, contributing to its structure and movement.

True Skin

Another term for dermis, the thick layer of living tissue below the epidermis that contains blood capillaries, nerve endings, sweat glands, hair follicles, and other structures.

Dermis

The layer of skin beneath the epidermis, containing nerve endings, sweat glands, and blood vessels.