At a Discount Rate of 6 Percent, What Is the Net

question 24

Multiple Choice

At a discount rate of 6 percent, what is the net present value of an investment project expected to yield $1,000 per year (to be received at year end) for the next three years?

• A) $3,000
• B) $2,829
• C) $2,673
• D) There is insufficient information to determine whether the project should be undertaken.

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Definitions:

Variances of Stocks

Measures of the dispersion of returns for a given stock, used to assess the risk associated with holding the stock.

Return on Stock

The gain or loss on an investment in stock, represented as a percentage of the investment's initial cost.

Unsystematic Risk

The risk associated with a specific issuer or a particular industry sector, unlike systemic risk, which impacts the entire market.

Increasing Market

A market trend characterized by rising stock prices and generally optimistic investor sentiment, often associated with economic growth.