Question

You wish to invest in equipment for your business. This investment will generate a revenue stream of $20,000 per year for the next 3 years. After year 3, you can salvage the equipment for $15,000. The required return is 10% compounded annually. Calculate the duration.

2.13 2.23 2.41 2.52 None of the Above |

Answer #1

**Solution:**

**The Duration of the investment is 2.13
years.**

**Thus the solution is option 1 = 2.13**

**Please find the attached screenshot of the excel sheet
containing the detailed calculation for the solution.**

Future Value of an Investment
An investment is projected to generate a continuous revenue
stream at the rate of
R(t) =
50,000e0.03t
dollars/year for the next 3 years. If the income stream is
invested in a bank that pays interest at the rate of
5.5%/yearcompounded continuously, find the total accumulated value
(in dollars) of this income stream at the end of 3 years. (Round
your answer to the nearest dollar.)

An investment will generate 10% annual return. You have $1000 of
your own money to invest and you want to make $85 per $500
invested. How much would you need to borrow and invest (In addition
to your capital) in the same investment in order to achieve your
goal, if your loan costs you 4%?
a. $1000 b. $1166.667 c. $583 d. $1.166 e. None of above

uestion 1: Evaluating investment projects
You are planning to invest $100,000 in new equipment. This
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next 2 years. The salvage value after 2 years is zero. The cost of
capital is 25% a year.
a) Compute the net present value
NPV = $
Enter negative numbers with a minus sign, i.e., -100 not ($100)
or (100).
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(ARR).
To compute ARR, first...

You plan to invest in bonds that pay 4.0%, compounded
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Please show me the work not in excel.

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HI5002 Pre-recorded Tutorial Questions for Topic 3A
Question 1: You wish to have an investment that will bring
about $20 000 in five years, and the rate of return is 8% per
annum. Required:
a. In term of time value of money, what does the amount of
$20,000 represent?
b. How much do you need to invest now if the rate is
compounded annually (to the nearest dollar)?
c. If you have $20,000 now and put the sum into a...

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Sisters Ltd is planning to invest in a capital project, which
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