Present value
Given the following cash flows,
Year 1: $2,000 Year 3: $6,000
Year 2: $4,000 Year 4 $2,000
a) Calculate the present value using a 10% discount rate:
b) If the discount rate were changed to 11% would you expect PV to increase or decrease? Why?
c) if the initial investment was $10,000, would you do the project? Why/ why not?
d) If a project had a zero NPV, would you do the project? why/why not?