Discount Rate A.) Present value Exercise:

A project is schedules to be completed this year but will not pay the company back for two more years. If the company receives $50,000 at the time, what is the balue of that money in today's terms if the discount rate is 6% ? (Show calculation)

B.) Net Present Value Exercise:

A company has an opportunity to invest in a project that appears to be profitable. It will cost the company $75,000 to implement and the end product is expected to show profits for five years after that. If the expected profits are as noted below and the company requires a rate of 10% should the company take on this project? (Calculate the NPV and analyze the results)

Year Profit

1 $10,000

2 $15,000

3 $20,000

4 $25,000

5 $30,000