Use the Table for the Question(s) Below -The Net Present Value (NPV) of an Investment That Costs

question 87

Multiple Choice

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:
$\begin{array} { l c c c c c c } \hline \text { Term } & \text { 1 year } & \text { 2 years } & \text { 3 years } & \text { 5 years } & \text { 10 years } & \text { 20 years } \\\hline \text { Rate } & & & & & & \\\text { (EAR\%) } & 5.00 \% & 4.80 \% & 4.60 \% & 4.50 \% & 4.25 \% & 4.15 \% \\\hline\end{array}$
-The net present value (NPV) of an investment that costs $2700 and pays $1000 at the end of one, three, and five years is closest to:

• A) -$71.38
• B) $21.47
• C) -$100.26
• D) $1665.62

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