Please correct answer and don't use hand rating Dimitri is willing to invest $45,000 for eight years, and is an economically rational investor. He has identified three investment alternatives (A, B, andC) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the eightyear investment period, complete the following table and indicate whether Dimitri should invest in each of the investments.Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearestwhole dollar.InvestmentInterest Rate and MethodExpected Future Value Make this investment?AB10% simple interest6% compound interest$C7% compound interest

Investment A: Simple InterestFormula: Future Value = Principal + (Principal * Interest Rate *…

Answered: Dimitri is willing to invest $45,000…

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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An investor is considering an investment that will pay $2,170 at the end of each year for the next 10 years. He expects to earn a return of 12 percent on his investment, compounded annually. Required: a. How much should he pay today for the investment? b. How much should he pay if the investment returns are received at the beginning of each year? (For all requirements, do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) a. Present value of ordinary annuity b. Present value of annuity due
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,680 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,170 plus an additional investment at the end of the second year of $5,850. What is the NPV of this opportunity if the interest rate is 2.3% per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is 2.3% per year? The NPV of this opportunity is $. (Round to the nearest cent.)
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,600 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,150 plus an additional investment at the end of the second year of $5,750. What is the NPV of this opportunity if the interest rate is 1.9%per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is per year?
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,440 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,110 plus an additional investment at the end of the second year of $5,550. What is the NPV of this opportunity if the interest rate is 1.5% per year? What is the NPV of this opportunity if the interest rate is 1.5% per year? The NPV of this opportunity is $_______ (Round to the nearest cent)
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,440 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,360 plus an additional investment at the end of the second year of $6,800. What is the NPV of this opportunity if the interest rate is 1.6% per year? Should Marian take it?
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,880 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,220 plus an additional investment at the end of the second year of $6,100. What is the NPV of this opportunity if the interest rate is 1.8% per year? Should Marian take it? (yes or no)
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $13,300; year 2, $10,800; year 3, $8,300; year 4, $5,800; year 5, $3,300; year 6, $0; and year 7, $13,300. How much should he pay if he expects to earn an annual return of 9 percent compounded monthly?
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $40,000 at the end of each of the next 3 years. The opportunity requires an initial investment of $ 10,000 plus an additional investment at the end of the second year of $50,000. What is the NPV of this opportunity if the interest rate is2% per year? Should Marian take it?
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $16,000 at the end of each of the next 3 years. The opportunity requires an initial investment of $4,000 plus an additional investment at the end of the second year of $20,000. What is the NPV of this opportunity if the interest rate is 3% per year? Should Marian take it? The NPV of this opportunity is $____ (Round to the nearest dollar.)
Sam Hart decides to invest $70,000 in a fund that will earn 6% annual interest, compounded semiannually. How much will his investment be worth in three years? Draw a timeline to illustrate the problem. What is the future value of your investment? (Use the present value and future value tables, a financial calculator, a spreadsheet or the formula method for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest cent, $X.XX.)
John is considering the purchase of a lot. He can buy the lot today and expects the price to rise to $15,000 at the end of 10 years. He believes that he should earn an investment yield of 8 percent compounded annually on his investment. The asking price for the lot is $7,000. Should he buy it? What is the internal rate of return compounded annually on the investment if Johnpurchases the property for $7,000 and is able to sell it 10 years later for $15,000?
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,080 at the end of each of the next three years. The opportunity requires an initial investment of $1,020 plus an additional investment at the end of the second year of $5,100. What is the NPV of this opportunity if the cost of capital is 2.3% per year? Should Marian take it? What is the NPV of this opportunity if the cost of capital is 2.3% per year? The NPV of this opportunity is $. (Round to the nearest cent.)

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