Question

You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:

End of Year A B C

1 $1,000 $1,000 $5,000

2 2,000 1,000 5,000

3 3,000 1,000 (5,000)

4 -4,000 1,000 (5,000)

5 4,000 3,000 15,000

What is the present value of each of these three investments if the appropriate discount rate is 14 percent?

a. What is the present value of investment A at an annual discount rate of 14percent?

Answer #1

Present Value of Cash Flows =

r = 14% OR 0.14

Present Value of Cash Flows A =

=

= **4150.19613593**

Present Value of Cash Flows B =

=

= **4471.81829754**

Present Value of Cash Flows C =

=

= **9688.57355207**

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You are given three investment alternatives to analyze. The cash
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Investment End of Year:
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# 2: A. $2,000 B. $3,000 C. $5,000
#3: A. $3,000 B. $3,000 C. ( $5,000 )
#4. A. ( $4,000 ) B. $3,000 C. ( $5,000 )
#5. A. $4,000 B. $5,000 C. $15,000.
What is the present value of each of these three investments if
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End of Year
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B
C
1
$3,000
$1,000
$4,000
2
4000
1000
4000
3
5000
1000
(4,000)
4
-6000
1000
(4,000)
5
6000
4000
14000
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End of Year
A
B
C
1
10,000
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2
10,000
3
10,000
4
10,000
5
10,000
10,000
6
10,000
50,000
7
10,000
8
10,000
9
10,000
10
10,000
10,000
Assuming an annual discount rate of 20 percent, find the
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You are given three investment alternatives to analyze. The cash
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End of Year
A
B
C
1
$
10,000
$
10,000
2
10,000
3
10,000
4
10,000
5
10,000
$
10,000
6
10,000
50,000
7
10,000
8
10,000
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10,000
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10,000
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(Related to Checkpoint 6.6)
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End of Year
A
B
C
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16000
3
16000
4
16000
5
16000
$16,000
6
16000
80000
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16000
8
16000
9
16000
10
16000
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time
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discount rate
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Problem 5-50 (similar to) (Present value of an uneven stream of
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END OF YEAR
A
B
C
1
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12000
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12000
4
12000
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