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1. A firm is considering an investment of a manufacturing press. It is going to cost the firm $1,500,000. It is expected to return $500,000 each year for the first three years and then return $250,000 for the fourth year. If the applicable interest rate is 4%, what would be the present value of the cash inflows, assuming payments are received at the end of each period (hint: you can use NPV)?

A) $1,360,795

B) $1,601,246

C) $1,750,000

D) $1,631,246

E) $1,555,795

2. Kati has decided that any inheritance she receives from her father will be used to establish a charitable remainder trust. Kati would like to have the flexibility to make additional contributions to the charitable remainder trust in the future. Which of the following would you recommend for Kati?

A) CRAT

B) CRUT

C) CLUT

D) CLAT

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92746841

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