Dennis wants to determine if the discount rate really makes


Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable at one rate of return, it will be acceptable at all rates of return. To explain why his thinking is incorrect, you are creating an example to illustrate your point. The cash flows you are using are as follows: time zero is -$83,000, years 1 through 5 are $21,300 each, and years 6 through 8 are $16,700 each. The net present value at a discount rate of 8 percent is _____ as compared to _____ at 20 percent. Show work please. a. -$31,068; -$4,825 b. $31,121; -$4,931 c. $31,298; -$5,064 d. $31,335; -$5,163 e. $31,464; $5,258

 

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Financial Management: Dennis wants to determine if the discount rate really makes
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