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

---

Definitions:

Commonly Agreed-upon

A term describing something that has been collectively accepted or approved by a majority.

Letters from an American Farmer

A series of essays written by J. Hector St. John de Crévecoeur in the late 18th century, depicting life in the American colonies and the emerging American identity.

Anti-Federalist

Individuals who opposed the creation of a strong federal government and the ratification of the Constitution in late 18th century America, preferring power to remain with states.