Consider the following cash flows over a 5-year period: -$100,000 @ t = 0; $35,000 @ t = 1; $45,000 @ t = 2; -$40,000 @ t = 3; $50,000@t = 4; and $60,000 @t=5. Using Descartes' rule of signs, how many positive rates of return are there?○ Exactly one.○ Exactly two.○ Exactly three.○ At most two.○ At most three.

Descartes' rule of signs helps determine a polynomial's positive and negative real roots. Positive…

Answered: Consider the following cash flows over…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A corporate bond returns 12 percent of its cost (in present value terms) in the first year, 11 percent in the second year, 10 percent in the third year, and the remainder in the fourth year. What is the bond's duration in years? Please show all the steps including the equation.
31) Suppose in 2017 you buy two year $1,000 face-value 5% coupon bond for $1,000. In 2018, interest rates decrease to 2%. If you decide to sell your bond in 2018, what will be the selling price of your bond and one-year rate of return for you? A) $1,020; 7% B) $1,000; 2% C) $971; -2.1% D) $1,029.4; 7.9%
a) Consider an investment which, for an initial charge of £10,000, returns £10,700 after three years. What is the internal rate of return of this investment? Enter your answer as a percentage to three significant figures. Do not enter the % sign. For example, if your answer is 1.23%, then enter 1.23. b) Suppose that an investment has internal rate of return 1.05% and that the current interest rate compounded annually is 1.1% Is the investment worth making?
2. Suppose there is a plot of land in Balik Pulau which the state government is considering developing. The first proposal is to use the land to create an open-space camping area and another proposal is to develop into a cultural heritage area. The open space camping area is expected to last 12 years while the cultural heritage area is expected to have a life span of 20 years. The net present value of the open space camping area is RM4.5 million while the net present value of the cultural heritage area is RM3 million. Assume the discount rate is 5%. a) Using the roll-over method, which project will be chosen? b) Using the equivalent annual net benefit (EANB) method, which project will be chosen?
Question 6 Suppose you are interested in buying a one-year 1,000 dirham bond. You have two options available in the bond market: Option 1 - Emirates Airline bond that pays a coupon rate of 4.75% per year paid annually. Option 2 - Emaar bond that pays a coupon rate of 6.0% per year paid annually. If you decide to buy the Emirates Airline bond, which of the prices below will give you a return approximately equal to the Emaar bond? O a. 956.9 dirhams Ob.973.2 dirhams O. 995.2 dirhams Od. 988.2 dirhams
do fast
Buena Vision Clinic is considering an investment that requires an outlay of $600,000 and promises a net cash inflow one year from now of $810,000. Assume the cost of capital is 10 percent. Required: 1. Break the $810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?

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