A Firm Has an Opportunity to Invest $100,000 Today That

question 62

Multiple Choice

A firm has an opportunity to invest $100,000 today that will yield $115,000 in one year.If interest rates are 6%,what is the net present value (NPV) of this investment?

• A)$8491
• B)$9000
• C)$14,151
• D)$15,000

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Definitions:

Thailand Bahts

The currency of Thailand, used as the standard monetary unit in the country.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Fair Hedge

A financial strategy used to reduce risk by taking offsetting positions in a security and its derivative, ensuring gains in one offset losses in the other.

British Pounds

The currency of the United Kingdom, also known as GBP (Great British Pound).