Use the Table for the Question(s) Below

question 92

Essay

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:

-What is the net present value (NPV) of an investment that costs $2,500 and pays $1,000 at the end of one, three, and five years?

---

Definitions:

Accumulated Depreciation

The cumulative amount of depreciation that has been charged to a fixed asset throughout its period of use.

Original Cost

The initial expenditure involved in acquiring an asset, including purchase price, transportation, and installation.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not expected to be converted into cash in the upcoming year.