Below is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next four years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%? a.$25,360 b.$14,536 c.$5,464 d.$5,360
Below is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next four years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%? a.$25,360 b.$14,536 c.$5,464 d.$5,360
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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Below is a table for the present value of $1 at compound interest .
Below is a table for the present value of anannuity of $1 at compound interest.
Using the tables above, if an investment is made now for $20,000 that will generate acash inflow of $8,000 a year for the next four years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%?
Year | 6% | 10% | 12% |
1 | 0.943 | 0.909 | 0.893 |
2 | 0.890 | 0.826 | 0.797 |
3 | 0.840 | 0.751 | 0.712 |
4 | 0.792 | 0.683 | 0.636 |
5 | 0.747 | 0.621 | 0.567 |
Below is a table for the present value of an
Year | 6% | 10% | 12% |
1 | 0.943 | 0.909 | 0.893 |
2 | 1.833 | 1.736 | 1.690 |
3 | 2.673 | 2.487 | 2.402 |
4 | 3.465 | 3.170 | 3.037 |
5 | 4.212 | 3.791 | 3.605 |
Using the tables above, if an investment is made now for $20,000 that will generate a
a.$25,360
b.$14,536
c.$5,464
d.$5,360
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