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You are designing a new product and want to estimate the net present value of the first year of future sales. You think you could make your first sale a year from now, and would have $5000 in revenue (sales) each month. For a nominal annual discount rate of 10%, compounded monthly, the net present value of that first year of sales is what? Answer to the nearest whole dollar. Hint: first draw the cash flow diagram; the first arrow up should be at t = 13 months and the last at t = 24 months.

You are designing a new product and want to estimate the net present value of the first year of future sales. You think you could make your first sale a year from now, and would have $5000 in revenue (sales) each month. For a nominal annual discount rate of 10%, compounded monthly, the net present value of that first year of sales is what? Answer to the nearest whole dollar. Hint: first draw the cash flow diagram; the first arrow up should be at t = 13 months and the last at t = 24 months.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are designing a new product and want to estimate the net present value of the first year of future sales. You think you could make your first sale a year from now, and would have $5000 in revenue (sales) each month. For a nominal annual discount rate of 10%, compounded monthly, the net present value of that first year of sales is what? Answer to the nearest whole dollar. Hint: first draw the cash flow diagram; the first arrow up should be at t = 13 months and the last at t = 24 months.
Transcribed Image Text:You are designing a new product and want to estimate the net present value of the first year of future sales. You think you could make your first sale a year from now, and would have $5000 in revenue (sales) each month. For a nominal annual discount rate of 10%, compounded monthly, the net present value of that first year of sales is what? Answer to the nearest whole dollar. Hint: first draw the cash flow diagram; the first arrow up should be at t = 13 months and the last at t = 24 months.
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