6. You invest P 5 000 today at an interest rate of 10% for four years,how much wouldbe the future value of the investment?а. Р3415b. Р7 000с. Р6 500d. P 7 3207. You are an incoming college freshman taking-up a four-year course.Suppose thatyou want to purchase a car immediately after graduating which willcost you P 750000. How much should you invest at the end of every year in aninvestment fund thatearns 9% annually to have enough to buy the car upon graduation?а. Р 164 ОООb. P 531 300c. P 607 445d. P 132 8288. If you invest a lump-sum amount of P 25 000 at an interest rate of12%, compoundedmonthly, how much would be your investment after 3 years?а. Р 34 ОООb. P 35 123c. P 39 338 d. none of the above9. An equipment with a cost of P 100 000 is expected to generatereturns of P 90000; P 60 O00 and P 50 000 for the first, second and third year,respectively. Using adiscount rate of 12%, what is the NPV of the project?a. P 60 121b. P 79 341c. P 83 431d. P 63 77810. What is the present value of a 6% investment that would pay P 30000 annuallyperpetually?а. Р 500 000b. Р 450 000с. Р ЗОО ОО0d. none of the above

6) Present value (P) = P 5000 r = 10% n = 4 years

Answered: 6. You invest P 5 000 today at an…

6. You invest P 5 000 today at an interest rate of 10% for four years, how much would be the future value of the investment? a. P3 415 b. P 7 000 c. P6 500 d. P 7 320

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

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

6. You invest P 5 000 today at an interest rate of 10% for four years,
how much would
be the future value of the investment?
а. Р3415
b. Р7 000
с. Р6 500
d. P 7 320
7. You are an incoming college freshman taking-up a four-year course.
Suppose that
you want to purchase a car immediately after graduating which will
cost you P 750
000. How much should you invest at the end of every year in an
investment fund that
earns 9% annually to have enough to buy the car upon graduation?
а. Р 164 ООО
b. P 531 300
c. P 607 445
d. P 132 828
8. If you invest a lump-sum amount of P 25 000 at an interest rate of
12%, compounded
monthly, how much would be your investment after 3 years?
а. Р 34 ООО
b. P 35 123
c. P 39 338 d. none of the above
9. An equipment with a cost of P 100 000 is expected to generate
returns of P 90
000; P 60 O00 and P 50 000 for the first, second and third year,
respectively. Using a
discount rate of 12%, what is th
e NPV of the project?
a. P 60 121
b. P 79 341
c. P 83 431
d. P 63 778
10. What is the present value of a 6% investment that would pay P 30
000 annually
perpetually?
а. Р 500 000
b. Р 450 000
с. Р ЗОО ОО0
d. none of the above

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What is the rate of return (the interest rate) on an investment today of $30,626.24 if the company expects to receive $45,000 in 5 years? а. 9% O b. 8% С. 6% d. 7%
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