Question

An investor is hesitating between two projects. The first will yield steady returns of X every 6 months for 10 years. The second will return 1000 per month for 5 years, then will yield 500 per month in perpetuity. If the effective annual rate is 10%, for what X would the investor be indifferent between the two projects ?

Answer #1

An investor is hesitating between two projects. The first will
yield steady returns of X every 6 months for 10 years. The second
will return 1000 per month for 5 years, then will yield 500 per
month in perpetuity. If the effective annual rate is 10%, for what
X would the investor be indifferent between the two projects ?

An investor is thinking about investing in one of two different
projects. The first opportunity will pay GhC 800 in four years and
the second investment will yield GhC 1000 in 5 years’ time. Which
investment opportunity should the investor venture in if the
discount rate is 8% per annum? Explain your answer.

Suppose an investor can invest in two stocks, whose returns are
random variables X and Y, respectively. Both are assumed to have
the same mean returns E(X) = E(Y) = μ; and they both have the same
variance Var(X) = Var(Y) = σ2. The correlation between X and Y is
some valueρ.
The investor is considering two invesment portfolios: (1)
Purchase 5 shares of the first stock (each with return X ) and 1 of
the second (each with return...

2.
Gurdreep is analyzing two projects. The first requires a $ 24,000
initial investment and returns $12,000 a year for four years. The
second project requires a $30,000 initial investment and returns
$14,000 a year for four years. What is the crossover point for
these two projects?
i need answer now

As an investor you are investigating two different investment
opportunities (projects) at time zero. Starting from year 1,
Project A offers to pay you $500 every year for 10 years, whereas
Project B offers to pay you $500 for the first year and a yearly
increased amount for the next 8 years after year 1. Project B’s
payment in year t+1 will be 3% higher than its payment in year t.
In year 0, Project A costs $2200 while Project...

Suppose the current annualized spot rates are as follows: 6
months 2% 12 months 4% 18 months 6% Assume semi-annual compounding
and semi-annual coupon payment. An investor has an investment
horizon of six months. She can invest her money in three ways.
First, buy a 6-month zero-coupon bond with a par of $1000 and hold
it until maturity. Second, buy a 12-month zero-coupon bond with a
par of $1000 and sell it 6 months later. Third, buy a 18- month...

As an investor you are investigating two different investment
opportunities (projects) at time zero. Starting from year 1,
Project A offers to pay you $500 every year for 10 years, whereas
Project B offers to pay you $550 for the first year and a yearly
increased amount for the next 8 years after year 1. Project B’s
payment in year t+1 will be 1% higher than its payment in year t.
In year 0, Project A costs $2200 while Project...

Your financial planner offers you two different investment
plans. Plan X is a $14,000 annual perpetuity. Plan Y is an annuity
lasting 13 years and an annual payment, $20,000. Both plans will
make their first payment one year from today. At what discount rate
would you be indifferent between these two plans?

Your financial planner offers you two different investment
plans. Plan X is a $20,000 annual perpetuity. Plan Y is a 10-year,
$34,000 annual annuity. Both plans will make their first payment
one year from today. At what discount rate would you be indifferent
between these two plans?

your financial planner offers you two different investment
plans. plan x is a 25000 annual perpetuity. plan y is a 10 year
51000 annual annunity. both plans will make their first payment one
year from today. at what discount rate would you be indifferent
between these two plans?

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