2. Project A requires an investment of $5,000 today and pays $3,000 at the end of year 1 and $4,000 at the end of year 3. Project Z pays $2,500 now and $X at the end of year 2, but requires and investment of $6,000 at the end of year 3. The net present value of the two projects are equal at an annual effective interest rate of 5%. Find X. (A) $4,405.06 (B) $4,407.06 (C)$4,409.06 (D) $4,410.06 (E) $4,411.06 (F) $4,415.06

2. Project A requires an investment of $5,000 today and pays $3,000 at the end of year 1 and $4,000 at the end of year 3. Project Z pays $2,500 now and $X at the end of year 2, but requires and investment of $6,000 at the end of year 3. The net present value of the two projects are equal at an annual effective interest rate of 5%. Find X. (A) $4,405.06 (B) $4,407.06 (C)$4,409.06 (D) $4,410.06 (E) $4,411.06 (F) $4,415.06

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,400 $510 $600 $600 $380 $180 Payback years: _______.__
An investment project costs $21,500 and has annual cash flows of $6,500 for 6 years. If the discount rate is 15 percent, what is the discounted payback period? Select one: a. 5.71 b. 3.91 c. 4.21 d. 4.91 e. 5.91
= 6. Assume the annual effective interest rate is i capital of £100,000 and is contemplating two projects: 2%. An individual wants to invest a Project A. She buys a property for exactly £100,000 at time t income from rent. (a) If rent is paid monthly in advance and each payment is £700, how long will it take before the present value of rental payments exceeds the initial cost of purchasing the property? 10 that will generate (b) To be mo realistic assume that rent increases every three years at a rate of 1% effective per annum compound, and taxes are paid at 20% on rental income. Moreover, maintenance work for the property will cost £1,500 to be paid at the end of every 5 years (and these are not subject to tax relief). If rental payments stop after 15 years, what is the net present value (at time t = 0) of all cash flows for 15 years? (Include maintenance costs paid at t = 15 years.)
You have been offered a project paying $300 at the beginning of each year for the next 20 years. What is the maximum amount of money you would invest in this project if you require 9 percent rate of return to your investment? OA. $2,739 B. $2,985 C. $15,348 OD. $16,729
A company is considering two projects. The discount rate is 10 percent, and the projects' cash flows would be: Years 1 2 3 Project A -$700 S500 S300 s100 Project B -$700 $100 $300 | $600 a. Calculate the projects' NPVS. b. If the two projects are independent, which project(s) should be chosen? c. If the two projects are mutually exclusive, which project should be chosen?
ut.2
You are considering two mutually exclusive projects with unequal lives. One of the projects has an up-front cost of $59,000 (CF0= -59,000) and produces positive after-tax cash inflows of $21,000 a year at the end of each of the next 5 years. Assuming the cost of capital is 9.2%, what is the equivalent annual annuity of the project?
Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: Cash flow: Payback 0 1 -$1,000 $350 years 2 $480 3 $520 4 $300 5 $100
What is the payback period for project E? Data Table - X years (Round to one decimal place.) (Click on the following icon in order to copy its contents into a spreadsheet) Cash Flow Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow year 6 $46,000 $100,000 $20,000 $9,200 $9,200 $10,000 $9,200 $40,000 $9,200 $30,000 $9,200 $0 $9,200 $0 Print Done
An investor is considering two investment projects. Project A requires an initial payment of £12,000. In return, the investor will receive a payment of £17,400 after one year. Project B requires an initial payment of £10,300. In return, the investor will receive a payment of £1,240 at the end of every month for one year. Calculate the cross-over rate of the projects 数字 Enter a percentage correct to 1 decimal place. % What is the payback period of each project? Project A:数字 Project B:数字 months months
Consider a project with an initial investment of $300,000, which must befinanced at an interest rate of l2% per year. Assuming that the required repayment period is six years, determine the repayment schedule by identifying the principal as well as the interest payments for each of the following repayment methods:(a) Equal repayment of the principal: $50,000 principal payment each year(b) Equal repayment of the interest: $36,000 interest payment each year(c) Equal annual installments: $72,968 each year
Project X has an upfront $3.5 million capital expe which is converted into an equivalent seven year annuity at a discount rate of 8% per year. Project Z has a $7 million initial capital outlay and will last for 14 years. Project Z has the same discount rate as Project X. What is the annualized capital cost of Project X? O $766,912 O $742,753 O $528,050 O $672,253

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS