If an Investment Costing $2000 Is Expected to Generate Real

question 62

Multiple Choice

If an investment costing $2000 is expected to generate real cash flows of $900 p.a.for three years,prices are expected to increase at a rate of 10% p.a. ,and the nominal cost of capital is 15%,what is the net present value of the investment?

• A)$520.59
• B)$740.79
• C)$471.97
• D)$389.79

---

Definitions:

Standard Deviations

A measure of the amount of variation or dispersion of a set of values relative to the mean.

Crystallized Intelligence

The ability to use learned knowledge and experience effectively.

Primary Mental Abilities

Fundamental skills and cognitive functions such as reasoning, memory, and perception that are considered essential for intelligence.

Inductive Reasoning

A rational procedure where several assumed or generally true statements are merged together to derive a particular outcome.