Question: a) C O is the initial cash flow on an investment, and C I is the cash flow at the end of one year The

a) CO is the initial cash flow on an investment, and CI is the cash flow at the end of one year

The symbol r is the discount rate.

i)Is CO usually positive or negative?

ii)What is the formula for the Present Value (PV) of an investment?

iii)What is the formula for the Net Present Value (NPV)?

iv)The symbol r is often termed OPPORTUNITY COST OF CAPITAL, Why?

v)If the investment is risk-free, what is the appropriate measure of r?

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