Essay
All of the following projects have an initial cost of $10,000. Which are acceptable at a discount rate of 9%?
A) Purchase an oil painting which can be sold in 3 years for $12,000?
B) Purchase a delivery vehicle which will generate net inflows of $2,000 per year for five years and which will have a salvage value of $3,000 at the end of the 5th year?
C) Invest in a video store that will generate net inflows of $3,000 per year for 4 years and which can be sold at the end of the 4th year for $2,000?
Correct Answer:

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A.PRESENT VALUE OF $12,000 AT THE END OF...View Answer
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