02_MoF_Do1_2016_FS

Description:

For each question, only one answer choice is correct. Answer all questions. We will discuss the solutions together.


Your brother has asked you to help him with choosing an investment. He has EUR5000 to invest today for a period of two years. You identify a bank deposit that pays an interest rate of 4.25 per cent per year with the interest being paid quarterly. What will be the value of the investment in two years? 






Rebecca wants to buy a house in six years. She hopes to be able to put down EUR25000 at that time. If the bank deposit she wants to invest in will pay 7.5 per cent annually, how much will she have to invest today? (Round to the nearest euro.)






Pedro Martinez wants to invest EUR25 000 in a spa that his sister is starting. He will triple his investment in six years. What is the rate of return that Pedro is being promised? (Rounded to the nearest per cent.) :






Which of the following statements regarding the NPV is INCORRECT?






You are considering investing in a start up project at a cost of EUR100,000. You expect the project to return EUR500,000 to you in seven years. The required rate of return of the project is 20 per cent. The NPV for this project is closest to: