1. A one-time business investment today of $25,000 promises to return $10,000 annually for the next 3 years, with no salvage value at the end of the project. What is the nominal rate of return on this investment during the period, before inflation? [EXCEL Formula = RATE]
A. 40.00% B. 6.02% C. 9.70% D. 4.84% (Excel Formula)
2. Quick Fix Company is considering buying a Crypto Currency Machine to print crypto currency with the following projected investment and cash flow amounts. Machine has no salvage value. Year Cash Flow Amounts 0 ($11,800) = Initial Investment
1 $22,500
2 $21,000
3 $12,000
4 $8,500
5 ($14,800)
3. Compute the NPV for the Crypto Currency Project if the appropriate cost of capital is 6%. [Excel Formula = NPV] [Hint: NPV of Cash Flows – Initial Investment = Net Present Value]
A. $11,114.62 B. ($ 685.68) C. $ 685.68 D. ($ 11,800.00)
(Excel Formula)