document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1143781>Question 1143781</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Assume that the cost of investment is 10 000 and will result in cash flows of 6 000 in the first year and 6 000 in year 2.the companys cost of capital is 20%.find the net present value. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #764748 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=764748\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> you have -10000 in time point 0<BR>\n" );
document.write( "you have +6000 in time point 1<BR>\n" );
document.write( "you have +6000 in time point 2\r<BR>\n" );
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document.write( "cost of capital is 20%.\r<BR>\n" );
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document.write( "discount the cash flow to time point 0 at 20%.\r<BR>\n" );
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document.write( "-1000 / 1.20 ^ 0 = -10000<BR>\n" );
document.write( "+6000 / 1.20 ^ 1 = +5000<BR>\n" );
document.write( "+6000 / 1.20 ^ 2 = 4166.67\r<BR>\n" );
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document.write( "add up the present values to get -833.33.\r<BR>\n" );
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document.write( "that's your net present value.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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