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(CLO 3) Please answer the A) Nassar will receive $13,000 per year for the next 10 years as royalty for her work on a Finance book. What is the present value of her royalty income if the opportunity cost is 11 percent? work in fighting COVID-19

(CLO 3) Please answer the A) Nassar will receive $13,000 per year for the next 10 years as royalty for her work on a Finance book. What is the present value of her royalty income if the opportunity cost is 11 percent? work in fighting COVID-19

Essentials Of Investments
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
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OS Ticket system My 11 (CLO 3) Please answer the following questions nswered A) Nassar will receive $13,000 per year for the next 10 years as royalty for her work on a Finance ut of book. What is the present value of her royalty income if the opportunity cost is 1l percent? B) Assume that you just won a prize from UAE government for your work in fighting COVID-19 pandemic. Your prize can be taken either in the form of AED 30,000 at the end of each of the next 25 years (that is, AED 750,000 over 25 years) or as a single amount of AED 400,000 paid immediately. estion a. If you expect to be able to ecrn 3% annually on your investments over the next 25 years, ignoring taxes and other considerations, which alternative should you take? Why? b. Would your decision in part a change if you could earn 8% rather than 3% on your investments over the next 25 years? Why? You may use the following formulas: FV PV = (1 + r)" S[(1 + r)" FV, = = CF × ()> CF 1 PVn (1 + r)". S[(1 + r)" – 1 × (1 + r) FV, = CF × MacBook Air DI F10 F11 F8 F9 F7 F6 F5 5 0 6 7 7 V 8 A 9 9 Y U HIJ K 3
Transcribed Image Text:OS Ticket system My 11 (CLO 3) Please answer the following questions nswered A) Nassar will receive $13,000 per year for the next 10 years as royalty for her work on a Finance ut of book. What is the present value of her royalty income if the opportunity cost is 1l percent? B) Assume that you just won a prize from UAE government for your work in fighting COVID-19 pandemic. Your prize can be taken either in the form of AED 30,000 at the end of each of the next 25 years (that is, AED 750,000 over 25 years) or as a single amount of AED 400,000 paid immediately. estion a. If you expect to be able to ecrn 3% annually on your investments over the next 25 years, ignoring taxes and other considerations, which alternative should you take? Why? b. Would your decision in part a change if you could earn 8% rather than 3% on your investments over the next 25 years? Why? You may use the following formulas: FV PV = (1 + r)" S[(1 + r)" FV, = = CF × ()> CF 1 PVn (1 + r)". S[(1 + r)" – 1 × (1 + r) FV, = CF × MacBook Air DI F10 F11 F8 F9 F7 F6 F5 5 0 6 7 7 V 8 A 9 9 Y U HIJ K 3
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