An investor undertakes a 12-year project in which he invests £50,000 at the outset and receives the following income: • During the first four-year period: £4,000 per annum paid quarterly in arrears. During the second four-year period: £X per annum paid half-yearly in arrears. . • During the final four-year period: £12,000 per annum paid continuously. There are no other payments under the investment. If the investor achieves an internal rate of return of 9% per annum convertible half-yearly, find the value of X.
An investor undertakes a 12-year project in which he invests £50,000 at the outset and receives the following income: • During the first four-year period: £4,000 per annum paid quarterly in arrears. During the second four-year period: £X per annum paid half-yearly in arrears. . • During the final four-year period: £12,000 per annum paid continuously. There are no other payments under the investment. If the investor achieves an internal rate of return of 9% per annum convertible half-yearly, find the value of X.
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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Transcribed Image Text:An investor undertakes a 12-year project in which he invests £50,000 at the outset and receives the
following income:
•
•
During the first four-year period: £4,000 per annum paid quarterly in arrears.
During the second four-year period: £X per annum paid half-yearly in arrears.
During the final four-year period: £12,000 per annum paid continuously.
There are no other payments under the investment.
If the investor achieves an internal rate of return of 9% per annum convertible half-yearly, find the
value of X.
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