Net Present Value is the difference between the present value of cash flows and the initial investment.
Net Present Value = Present Value of cash flows - Initial Investment
The following image shows the Net Present value of the cash flows:
Net Present Value = $122,142 - $120,000
Net Present Value = $2,142
Bonds are a form of a debt captial
Answer:
Back-loaded
Explanation:
A back-loaded contract can be defined as a contractual arrangement between two or more parties, in which higher costs are levied or higher benefits are accrued to a project towards the end of its term (duration) as against lower costs or benefits at its beginning.
This ultimately implies that, a back-loaded contract allows lower wage adjustment in the first year with a consequent higher increase towards the end of a contract.
In this scenario, a 10 percent three-year wage increase is provided as a 2 percent increase in the first year, 3 percent in the second year, and 5 percent in the third year. This is an example of a back-loaded contract.
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