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Say, today (Year 0), a small business invests $1,000 to build a small factory. In one year (Year 1), the Cash Flow from this factory is $2,000. Say, the Cash Flow grows 5% (Growth Rate) in the second year (Year 2) to $2,100. The discount rate is 10%. What is the Net Present Value? Group of answer choices $1,735.54 $2,553.72 $3,553.72

Say, today (Year 0), a small business invests $1,000 to build a small factory. In one year (Year 1), the Cash Flow from this factory is $2,000. Say, the Cash Flow grows 5% (Growth Rate) in the second year (Year 2) to $2,100. The discount rate is 10%. What is the Net Present Value? Group of answer choices $1,735.54 $2,553.72 $3,553.72

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Let's try a more complex Net Present Value (NPV) question.

Say, today (Year 0), a small business invests $1,000 to build a small factory. In one year (Year 1), the Cash Flow from this factory is $2,000. Say, the Cash Flow grows 5% (Growth Rate) in the second year (Year 2) to $2,100. The discount rate is 10%.

What is the Net Present Value?

Group of answer choices

$1,735.54

$2,553.72

$3,553.72

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