A process engineer plans on investing $5,000.00 now so that they may withdraw $500.00 a year for 12 years and still have $1,000.00 left in the account at the end of 12 years. a) Sketch the Cash Flow diagram. b) Write the equation for Present Worth of the cash flows in terms of the unknown rate of return. c) Calculate the rate of return on this investment using net present worth analysis

A process engineer plans on investing $5,000.00 now so that they may withdraw $500.00 a year for 12 years and still have $1,000.00 left in the account at the end of 12 years. a) Sketch the Cash Flow diagram. b) Write the equation for Present Worth of the cash flows in terms of the unknown rate of return. c) Calculate the rate of return on this investment using net present worth analysis

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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Green Caterpillar Garden Supplies Inc. is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Delta’s expected future cash flows. To answer this question, Green Caterpillar’s CFO has asked that you compute the project’s payback period using the following expected net cash flows and assuming that the cash flows are received evenly throughout each year. Complete the following table and compute the project’s conventional payback period. Round the payback period to the nearest two decimal places. Be sure to complete the entire table—even if the values exceed the point at which the cost of the project is recovered. Year 0 Year 1 Year 2 Year 3 Expected cash flow -$4,000,000 $1,600,000 $3,400,000 $1,400,000 Cumulative cash flow Conventional payback period: years The conventional payback period ignores the time value of money, and this concerns…
Draw a cash flow diagram of any investment that exhibits both of the following properties: The investment has a 4-year life. The investment has a 10 percent/year internal rate of return.
A company must make a choice between two investment alternatives. Alternative 1 will return the company $33,000 at the end of two years and $70,000 at the end of seven years. Alternative 2 will return the company $8,000 at the end of each of the next seven years. The company normally expects to earn a rate of return of 10% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion. The present value of Alternative 1 is S (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The present value of Alternative 2 is S (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The preferred alternative is Alternative 1. Alternative 2.
get the answer as per posiblity
Use the following information for the next two problems: John Jones wants to invest in rental property. He has decided to invest in Portland. He has developed the following estimates of the cash flows for these properties: Yearly After-Tax Cash Flows Probability $10,000 .10 15,000 .20 30,000 .40 45,000 .20 50,000 .10 Find the expected value Find the standard deviation
(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment Alternatives End of Year A B C 1 $ 18,000 $ 18,000 2 18,000 3 18,000 4 18,000 5 18,000 $ 18,000 6 18,000 90,000 7 18,000 8 18,000 9 18,000 10 18,000 18,000 (Click on the icon in order to copy its contents into a spreadsheet.) Assuming an annual discount rate of 23 percent, find the present value of each investment. Question content area bottom Part 1 a. What is the present value of investment A at an annual discount rate of 23 percent? $ enter your response here (Round to the…
The present value represents the amount of money you would have to deposit today in order to match what you would get from the income stream at the future date. The formula is Time = M = i Future value represents the total amount of money you would have if you deposit the income stream until a future date. The formula is To start our problem we need to identify the variables. Rate =r= i Income Stream S(t) = i Present Value = years % M 1. 0 S (t) et dt. Future Value = Present Value* erM dollars/year
I need full details solution with explination.
When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) Initial cost of the investment minus the annual net cash inflow Average amount of the investment divided by the average annual net income Initial cost of the investment divided by the annual net cash inflow Present value of net cash inflow divided by the initial cost of the investment Future value of net cash inflow divided by the initial cost of the investment Present value of the net cash inflow minus the initial cost of the investment Annual net cash inflow minus the initial cost of the investment Average annual net income divided by the average amount of the investment
Pete Nunn is trying to decide whether to go ahead with an investment opportunity that costs $60,000. The expected incremental cash inflows are $32,000, while the expected incremental cash outflows are $17,000. What is the payback period?
Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?
Beyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)

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