ExamView Pro - quizpdvcosts

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 quiz 7 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Suppose that you have won a wrongful injury lawsuit and have been awarded $5 million dollars. However, the $5 million is going to come in two payments. The first payment is $3 million and will be paid in exactly one year. The remaining $2 million is paid in exactly two years time. If the interest rate is 5%, what is the Present Discounted Value of the payments? a. $4.3 million c. $5.1 million b. $4.67 million d. $5.3 million ____ 2. Your company, “When Life Gives You Lemons Inc.”, is thinking about expanding the number of stands that it currently has from 15 to 20. It will cost $200,000 today to complete the expansion. The expansion will permanently increase profits by $15,000 every year starting in one year’s time. If the interest rate is 8% what is the PDV of the expansion project. Should the company do it?
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ExamView Pro - quizpdvcosts - Name: _ Class: _ Date: _ ID:...

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