Question

1. You have just received notification that you have won the $2 million first prize in the Monarch Lottery. However, the prize will be awarded on your 55th birthday, 34 years from now. The appropriate discount rate is 8% What is the present value of your winnings?

A

$69,598.77

B

$146,090.61

C

$147,698.22

D

$133,333.33

E

$142,000.00

2. The difference between an investment's market value and its cost is the __?

A

net present value

B

profitability index

C

internal rate of return

D

profile period

E

average accounting return

3. A project has an initial cost of $15,400 and produces cash inflows of $7,200, $8,900, and $7,500 over three years, respectively. What is the discounted payback period if the required rate of return is 12 percent?

A

2.31 years

B

2.35 years

C

2.55 years

D

2.62 years

E

never

Answer 1

1)

=PV(8%,34,,2000000)

=$146,090.61

2)

A. net present value

3)