Compute the NPV for Project X with the Cash Flows

question 29

Multiple Choice

Compute the NPV for Project X with the cash flows shown as follows if the appropriate cost of capital is 9 percent.
$$\begin{array} { l l l l l l l l l } \text { Time } & 0 & 1 & & 2 & & 3 & 4 & 5 \\\text { Cash Flow } & - \$ 5,000 & \$ 1,000 & \$ & 2,000 & \$ & 2,000 & \$ 500 & \$ 500\end{array}$$

• A) ?$2,013.18
• B) ?$175.66
• C) $486.29
• D) $9,824.34

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Definitions:

Domestic Macroeconomic Adjustments

Changes made within a country's economy to address macroeconomic issues such as inflation, unemployment, and economic growth.

Foreign-exchange Reserves

Assets held by a central bank in foreign currencies, which are used to back liabilities on their own issued currency as well as to influence monetary policy.

Pegged Exchange Rate

A currency system where a country's currency value is fixed or linked to another currency or a basket of currencies.