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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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Answer:

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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