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Story Company is investing in a giant crane. It is expected to cost $6 million in initial investment, and it is expected to generate an end-of-year after-tax cash flow of $3 million each year for three years. Calculate the NPV at 12 percent.

A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments).

If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest?

Which of the following methods of evaluating capital investment projects incorporates the time value of money concept?

Consider a bond with a face value of $1,000, an annual coupon rate of 6 percent, a yield to maturity of 8 percent, and 10 years to maturity. This bond’s duration is

Mr. Adams invests $1,000 at a 10 percent nominal rate for one year. If the inflation rate is 4 percent, what is the real value of the investment at the end of one year?

If the cash flows for project A are C0 = -1,000; C1 = +600; C2 = +400; and C3 = +1,500, calculate the payback period.

A government bond issued in Germany has a coupon rate of 5 percent, a face value of 100 euros, and matures in five years. The bond pays annual interest payments. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 106 euros.

If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest?

Suppose a firm has $100 million in excess cash. It could