A project costing $1000 and returning $450 annually for three will have a NPV > $0 if the discount rate = 15%.

Answer:

A project costing $1000 and returning $450 annually for three will have a NPV > $0 if the discount rate = 15%.

To calculate the present value cash flow of annuity=[1-(1+r)^-n]/r*CF

Where

CF=returning

R=discounting rate

N=number of years

Cf=$450

R=15%

N=3years

450* {[1-(1+0.15)^-3]/0.15}

Present value Cash inflow=$1027.45

NPV=present value cash inflow- present value cash outflow

     =$1027.45-$1000=$27.45

True, since NPV is $27.45 which is greater than $0