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29 March, 19:14

A lump sum of $5,000 is invested at 10% per year for five years. The company's cost of capital is 8%. Which is true? The investment has a future value of $7,347 The investment has a future value of $8,053 The investment has a present value of $5,000 The investment has a net present value of $5,000 None of the above

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  1. 29 March, 21:26
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    The correct answer is B: The investment has a future value of $8,053

    Explanation:

    Giving the following information:

    A lump sum of $5,000 is invested at 10% per year for five years. The company's cost of capital is 8%.

    We need to calculate the final value of the investment. We will use the following formula:

    FV = PV * (1+i) ^n

    FV = 5,000*1.10^5 = $8,052.55
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