What is net present value

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Reference no: EM132053189

1. The Blueberry Company is considering a project which will cost $336 initially. The project will not produce any cash flows for the first 3 years. Starting in year 4, the project will produce cash inflows of $403 a year for 4 years. This project is risky, so the firm has assigned it a discount rate of 17 percent. What is the net present value?

2. Consider a five-year bond with a 6% coupon selling at a yield to maturity of 8%. If interest rates remain constant, one year from now the price of this bond will be:

Bond Coupon Time to Maturity Yield to Maturity Rank (highest = 1, lowest = 5)

A 15% 20 years 10% _______

B 15% 15 years 10% _______

C 0% 20 years 10% _______

D 8% 20 years 10% _______

E 15% 15 years 15% _______

Reference no: EM132053189

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