21. A project has the following expected cash flows:
Time Cash Flow ($)
0 (125,000)
1 100,000
2 200,000
If the risk-free interest rate is 4 percent, expected inflation is 3 percent, the market
risk premium is 8 percent and the Beta for the project is 1, the investment’s net
present value (NPV) is closest to:
A. $113,000.
B. $124,000.
C. $139,000.
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