Asked by Masaki Sakurai on Jul 02, 2024
If the cost of capital is 5% then the net present value of the investment is
A) $6,020.41
B) $7,380.95
C) -$7,380.95
D) $10,000
Net Present Value
A calculation used to assess the value of future cash flows in today's dollars, considering the time value of money.
Cost of Capital
The cost of funds used for financing a business, typically expressed as an annual percentage, including the cost of equity and debt.
Cash Flows
The total amount of money being transferred into and out of a business, indicating its financial health.
- Understand the concept of Net Present Value (NPV) and its application in investment decisions.
Learning Objectives
- Understand the concept of Net Present Value (NPV) and its application in investment decisions.
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