A. What is the net present value of an investment that yields the following cash flows and could be sold for $10 millions at the end of 5 years? Utilize a 10% discount rate.
Year 1:0
Year 2: $1,000,000
Year 3: $1,000,000
Year 4: $1,000,000
Year 5: $1,000,000
B. What is the debt service payment on a loan with the following terms ?
Loan amount: $100,000
Interest rate: 10%
Term: 7 years