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Question 2 [10 marks) (a) A project needs an initial investment of $2,000 and will...

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Question 2 [10 marks) (a) A project needs an initial investment of $2,000 and will generate $750 cash flows (at year end) for four consecutive years. Calculate the Net Present Value (NPV) for the project if the cost of capital is 17%. [4] (b) The price of a stock is $70 at the beginning of the year and $80 at the end of the year. Assume the stock paid a $5 dividend and inflation was 3%, calculate the real holding period return for the year using the EXACT Fisher effect approach. [4] (c) Suppose that you are going to have a loan for a new car with 0.8% monthly interest rate. Calculate the effective annual rates (EAR) with compounding 12 times a year. [2]

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