- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 5. Capital Investments and Capital Allocation
- Subject 2. Capital Allocation
CFA Practice Question
Michael undertakes an investment with an initial investment of $10,000, and he expects to receive $3,500 a year for the next four years. If the required return is 15%, what is the NPV?
B. $4.63
C. -$7.58
A. $5.49
B. $4.63
C. -$7.58
Correct Answer: C
User Contributed Comments 7
| User | Comment |
|---|---|
| zhaojiang | FV=0, N=4, I/Y=15, PMT=3,500 CPT PV=9,992.42 NPV=-$10,000+$9,992.42=-$7.58 |
| thekapila | on BAII 2ND RESET CF0 10000 CF1 3500 F01 = 4 I = 15 CPT NPV = -7.58 |
| julescruis | Whenever cash flow are constant we should use the calculation method presented by zhaojiang as it is quicker |
| mattg | I love my HP12C! Anyone using the BAII, I advise you to throw it in the trash immediately and go get the HP I started on the BAII and it broke so I switched ... MUCH more intuitive, plus the buttons take effort to push so not so many mis-pressed keys! |
| johntan1979 | It's never about which calculator is better but WHOSE hands it is in. |
| jonan203 | jt1979 is right, but i love me some HP12C doggystyle polish action... |
| jlizzy | unsure what required rate of rtn is here? does this indicate how much it will cost to borrow money ($10k)? |