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9. You are considering buying an investment from an investment company. If you buy the investment,...

9. You are considering buying an investment from an investment company. If you buy the investment, you will receive $150 every three months for five years. The first payment will be made as soon as you buy the investment. If the required rate of return is 16 percent, how much should you pay for this investment?

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Homework Answers

Answer #1

Solution:-

Time = 5 years

Time in Quarter = 5 *4 = 20 Quarter

Rate = 16%

Rate for Quarter = 16% / 4 = 4%

To Calculate How much pay for this investment-

Present Value = Cash flows *

Present Value = $150 *

Present Value = $150 *

Present Value = $150 * 13.59033

Present Value = $2,038.55

Amount pay for this investment is $2,038.55

If you have any query related to question then feel free to ask me in a comment.Thanks.

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