Question 1: George William buys a machine for his business. The machine costs $150,000. George estimates that the machine can produce $40,000 cash inflow per year for the next 5 years. George's cost of capital is 10%. What is the approximate net present value?
A. $1,632.
B. $16,796.
C. $24,212.
D. $31,632.
Question 2: Anna Taylor buys a machine for her business. The machine costs $150,000. Anna estimates that the machine can produce $40,000 cash inflow per year for the next 5 years. Her cost of capital is 12%. Based upon the net present value of this investment, Anna should:
A. invest in the machine.
B. invest in the machine if she can get a higher cost of capital.
C. not invest in the machine.
D. cannot tell without additional information
What are prime mortgages? What are near prime mortgages (Alt A)? What are subprime loans?