1. The difference between the present value of an investment’s future cash flows and its initial cost is the:
payback period.
internal rate of return.
net present value.
discounted payback period.
profitability index.
2. What is the net present value of a project with an initial cost of $36,900 and cash inflows of $13,400, $21,600, and $10,000 for Years 1 to 3, respectively? The discount rate is 13 percent.
−$287.22
$797.22
−$1,350.49
$204.36
−$1,195.12