If an investment costing $2,000 is expected to generate real cash flows of $900 p

If an investment costing $2,000 is expected to generate real cash flows of $900 p.a. for three years and prices are expected to increase at a rate of 10% p.a., what is the real required rate of return if the nominal rate of return is 15%?
Select one:
a. 6%
b. 5%
c. 1.05%
d. 4.55%


We are evaluating a project that costs $1.68 million, has a five-year life and no salvage value. Assume depreciation is straight-line to zero over the life of the project. Sales are projected at 82 000 units per year. Price per unit is $43.29, variable cost per unit is $22.18 and fixed costs are $623 000 per year. The tax rate is 34% and we require a 10% return on this project. What is the sensitivity of NPV to a 100-unit change in the sales figure?
Select one:
a. $3998.40
b. $4609.18
c. $4897.20
d. $5281.55