(6A Question 1)

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Thomas Green is using net present value (NPV) when evaluating investment opportunities. His required rate of return is 5.10 percent. The investment will produce the same after-tax cash inflows of $488,672 per year at the end of the year for 6 years. What is the NPV of a investment opportunity if the initial cost is $1,551,068?

Round the answer to two decimal places.

Answer: 921,368.12

(6A Question 2)

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Assume an individual makes a lump sum investment at the beginning of year one of $3,045. The expected return on this investment is $7,077 (after tax) to be received as a single amount at the end of year 4. The investors discount rate, for an alternative safe investment, is 11.38 percent after tax. What is the net present value of the investment under consideration?

Round the answer to two decimal places.

Answer: 1,553.54