Question

You have an opportunity to make an investment that will pay
$300 at the end of the first year, $500 at the end of the
second year, $400 at the end of the third year, $100 at the end
of the fourth year, and $ 200 at the end of the fifth year.

a. Find the present value if the interest rate is 6 percent.

b. What would happen to the present value of this stream of cash
flows if the interest rate were zero percent?

Answer #1

You are offered a four-year investment opportunity costing
$100,000 today. The investment will pay $25,000 in the first year,
$27,000 in the second year, $30,000 in the third year, and $40,000
in the fourth year. Investments of comparable risk require a 10%
rate of return in the financial market. Should you accept the
investment opportunity and why?
A.
Yes, those cash payments look good to me because they add up to
$122,000.
B.
Yes, because the investment’s cash payments represent...

You have been offered an investment that promises to pay out
$20,000 at the end of the year, followed by payments of $30,000,
$40,000, and $50,000 at the end of the subsequent years. Yields in
the market are expected to steadily increase over the next year so
that the appropriate discount rate is 6% for the first year, 7% for
the second year, 8% for the third year, and $9% for the fourth
year. How much would you be willing...

You are valuing an investment that will pay you $14,000 the
first year, $16,000 the second year, $19,000 the third year,
$21,000 the fourth year, $25,000 the fifth year, and $31,000 the
sixth year (all payments are at the end of each year). What is the
value of the investment to you now if the appropriate annual
discount rate is 10.00%

And
investment will pay $100 at the end of each of the next three
years, $200 at the end of year 4, $300 at the end of year 5, and
$500 at the end of year 6. If other investments of equal risk or an
8% annually, what is its present value.

5-7 Present and Future Values of a Cash Flow
Stream An investment will pay $100 at the end of each of
the next 3 years, $200 at the end of year 4, $300 at the end of
year 5, and $500 at the end of Year 6. If other investments of
equal risk earn 8% annually, what is its present value? Its future
value?

A company has three independent investment opportunities. Each
investment costs $1,000, and the firm's cost of capital is 10%. The
cash inflow of each investment is as follows:
cash inflow
A
B
C
year
1
$300
500 100
2
300
400 200
3
300
200 400
4
300
100 500
If the company uses net present value method to evaluate its
investments, which investment(s) should the firm make?
investment...

1. You are valuing an investment that will pay you $6,000 the first
year, $8,000 the second year, $11,000 the third year, $13,000 the
fourth year, $17,000 the fifth year, and $23,000 the sixth year
(all payments are at the end of each year). What is the value of
the investment to you now if the appropriate annual discount rate
is 8.00%?
2.
You are considering buying a stock with a beta of 3.10. If the
risk-free rate of return...

An investment will pay $100 at the end of each of the next 3
years, $200 at the end of Year 4, $300 at the end of Year 5, and
$500 at the end of Year 6. If other investments of equal risk earn
6% annually, what is its present value? Its future value? Do not
round intermediate calculations. Round your answers to the nearest
cent..

27) You are valuing an investment that will pay you nothing the
first two years, $18,000 the third year, $20,000 the fourth year,
$24,000 the fifth year, and $30,000 (all payments are at the end of
each year). What is the value of the investment to you now if the
appropriate annual discount rate is 13.00%?
$102,414.54
$40,588.54
$92,000.13
$74,756.75
$52,177.07

You have been offered the opportunity to invest in a project
which is exected to provide you with the following cash flows:
$4,000 in 1 year, $12,000 in 2 years, and $8,000 in 3 years. If the
appropriate interest rates are 6 percent for the first year, 8
percent for the second year, and 12 percent for the third year,
what is the present value of these cash flows?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 23 minutes ago

asked 42 minutes ago

asked 48 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago