a) What is the PV of receiving 2,000/year starting in 3 years going for 17 years if the discount rate is 11%? b) What is the NPV of a project that costs $1,500,000 and generates 140,000/year forever if the discount rate is 9%? c) A project will provide in 3 years either $12,000 with 30% probability, $22,000 with a 20% probability, $38,000 with a 40% probability, and $79,000 with a 10 % probability. Given an 8% discount rate, what is its expected PV?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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a) What is the PV of receiving 2,000/year starting in 3 years going for 17 years if the discount
rate is 11%?
b) What is the NPV of a project that costs $1,500,000 and generates 140,000/year forever if the
discount rate is 9%?
c) A project will provide in 3 years either $12,000 with 30% probability, $22,000 with a 20%
probability, $38,000 with a 40% probability, and $79,000 with a 10% probability. Given an 8% discount
rate, what is its expected PV?
Transcribed Image Text:a) What is the PV of receiving 2,000/year starting in 3 years going for 17 years if the discount rate is 11%? b) What is the NPV of a project that costs $1,500,000 and generates 140,000/year forever if the discount rate is 9%? c) A project will provide in 3 years either $12,000 with 30% probability, $22,000 with a 20% probability, $38,000 with a 40% probability, and $79,000 with a 10% probability. Given an 8% discount rate, what is its expected PV?
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