RENT
by Jonathan Larson
??
(The audience enters in the theatre to discover a stage bare of curtains.
At stage left looms a metal sculpture intended to represent: [a] a totem
pole/Christmas tree that stands in an abandoned lot, [b] a wood burning
stove with a snaky chimney that is at the center of MARK and ROGERs
loft apartment, and [c] in Act II, a church steeple. On stage the
five-musician band
The 18% discount rate would give an approximation to the correct NPVs for projects with all (or most) of the inflows in the first year.
The present value of $1 to be received one year from now, discounted at 18% is: $0.8475
The present value of $1 × (1 – 0.08) (that is, $0.92) to be received one year from now, discounted at 10% is: $0.8364
The former calculation overstates the correct a