1. What is the net present value of an investment that costs $75,000 and has a salvage value of $45,000? The annual profit from the investment is $15,000 each year for 5 years. The cost of capital at this risk level is 12%.
2. The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years. What is the net present value?
3. What is the present value of $5,600 when the interest rate is 8% and the return of $5,600 will not be received for 15 years?