Investment X offers to pay you $5,300 per year for eight years, wheras Investmeny Y offers to pay you $7,300 per year for five years. Which of these cash flows streams has the higher present value if the discount rate if 5%? If the discount rate is 15%?

Investment X offers to pay you $5,300 per year for eight years, wheras Investmeny Y offers to pay you $7,300 per year for five years. Which of these cash flows streams has the higher present value if the discount rate if 5%? If the discount rate is 15%?

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

See similar textbooks

Related questions

Q: a. What single investment made today, earning 10 % annual interest, will be worth 10,000 TL at the…

A: Given information: Future worth is 10,000 Interest rate is 10% Number of years is 3

Q: Investment X offers to pay you $3,423 per year for 11 years, whereas Investment Y offers to pay you…

A: Present value refers to the discounted value of the future cash flows for the given period of time…

Q: For the given cash flow, if the equivalent uniform annual payments is $2000 and the interest rate is…

A: Uniform annual payment = $2000 i = 4% = 0.04 Period = 9 years Future value of annuity is calculated…

Q: Determine the future equivalent value of the following cash flow pattern when interest is 6% per…

A: Present Value is a capital budgeting techniques. whihc help in knowing the present value of future…

Q: Skysong, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain…

A: Present value:Present value is a financial concept that determines the present value of a quantity…

Q: en the following two sets of cash flows: ion A: $48,858.00 in 3 years plus $Y in 13 years time. ion…

A: In this we have to make both options equal and than we can get the Y.

Q: Determine the equivalent present value or present worth of the following cash flow at an interest…

A: Correct Option is d- $12,959

Q: Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you…

A: Investment XCash Flow = cfx = $6100Time = tx = 9 YearsInvestment YCash Flow = cfy = $8400Time = ty =…

Q: What is the most you should pay to receive the following cash flows if your required rate of return…

Q: Homework/ An electrical engineer wants to deposit an amount P now such that she can withdraw an…

A: Investment is way to spend your money to get the required return out of it in a certain period of…

Q: Consider the following cash flows. The interest rate is 10%. What is the total wealth after 2 years…

A: Given, we are supposed to find out the cashflow price and the amount which is to be received after…

Q: If you are promised $50,000 six years from now, the present worth at a real rate of return of 4% per…

A: The current value of the cash flow or stream of cash flow after discounting is termed as the present…

Q: You are to receive $100 in one year from now, $200 in two years and $300 in three years. If the…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: What would you be willing to pay (now) for the following yearend cash flows if your required return…

A: The concept of time value of money will be used here. As per the concept of time value of money the…

Q: 1. I borrow $10000 at 10% per year interest. I plan to repay the loan after 5 years. How much would…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y offers to pay you…

A: Investment XCash Flow = CFx = $7500Time = tx = 9 YearsInvestment YCash Flow = CFy = $10200Time = ty…

Q: What is the present value

A: Present Value can be calculated using the following formula: Present Value = Annual cash flow /…

Q: You are offered the choice of 4 cash flow streams. Assume an 8% discount rate for each. Which cas…

A: The concept of time value of money will be used here. As per the concept of time value of money the…

Q: QUESTION . Al-Salam is expecting the following cash flows starting at the end of the year BD…

A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…

Q: hat is the present value of a cash flow stream of 1,000 per year annually for 12 years that then…

A: Present value is the equivalent value of money today based on the based on the future cash flow from…

Q: A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over…

A: Solution:- Present value means the value in today’s terms after discounting the future cash flows to…

Q: You invest $5000 today and plan to invest another $4000 four years from today. You plan to withdraw…

A: The present value is a concept in finance that refers to the value today of a future payment or a…

Q: What is the present value of a perpetual stream of cash flows that pays $ 7,500 at the end of…

A: Year one cash flow = $7500 Growth rate = 0.02 Discount rate = 0.09 Discount rate = 0.07 Present…

Q: (Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three…

A: Discount rate = r = 25%

Q: P = ? 2.000.000 6 8.000.000 12 6.000.000 14

Q: If you deposit BD1,500 now, BD3,600 three years, BD2000 seven years, and BD1,800 nine years from now…

A: Deposit now = 1500 Deposit in three years = 3600 Deposit in seven years = 2000 Deposit in nine years…

Q: Use the ERR method with ∈=8% per year to solve for a unique rate of return for the following…

A: Descartes’ rule of sign is used to determine the maximum number of real numbers (positive) solutions…

Q: Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you…

A: With a certain rate of return, present value (PV) is the current worth of a future financial asset…

Q: Problem 6: Calculate the present values at t = 0 (now) of the following cash flows: a. $100 every…

A: Since you have asked a question with multiple parts and the first 3 parts have been solved, we will…

Q: Investment X offers to pay you $9,125 per year for 2 years at a discount rate of 4.5%, Investment Y…

A: According to the time value of money principle, a specific amount retained today is worth more than…

Q: Q7: What is the value of a perpetuity of P100 per year if the discount rate is 5%, 7%, 11%? Answer:…

A: Here, Details of Ques-7: Amount per year for perpetuity is P100 Discount Rate is 5%,7% and 11%…

Q: Consider the cash flow shown in the accompanying diagram. If the value of C is $937, calculate the…

A: The PV of an investment refers to the collective value of the cash flows of the investment assuming…

Q: Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you…

A: Net Present Value - It is the difference between the present value of cash outflow and present…

Q: What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of year…

A: Year 1 cash flow (CF1) = $80,000 Growth rate (g) = 0.06 Interest rate (r) = 0.10 Present value = ?

Q: what is the present value of a series of $6000 end of the year cash flowsto be received forever if…

A: Time value of money is one of the useful technique being used in finance. It says that a sum of…

Q: At i = 10% per year and a loan amount of $10,000. If N= 20, what are the payments and future value?…

A: A sequence of payments of equal amounts in equal intervals of time can be called the annuity. Loan…

Q: An electrical engineer wants to deposit an amount P now such that she can withdraw an equal annual…

A: A1 = 2000 per year N = Time Period = 5 years End of year deposits A2 = 3000 per year Time Period = 3…

Q: dentify which model Skysong might use to estimate the discounted fair value under each scenario, and…

A: The discounted cash flow model calculates an investment's intrinsic value using the projection of…

Q: klp.1

A: The objective of the question is to calculate the present value of an investment product that…

Q: Find the value of X so that the present value of the following cash flow is equal to $70,000.…

A: We will use the concept of time value of money. As per the concept of time value of money for…

Q: Beginning Cash Flow of Year P2,500 2 2,750 3 3,000 4 3,250 5 3,500

A: Present value is the current value of a future cash flow. Present value of inflows=cash…

Q: What is the present value of a cash flow stream of $1,000 per year annually for 18 years that then…

A: ParticularAmountCash Flow1000Years18Growth Rate0.05Discount Rate0.11

Q: Suppose you would get OMR 500 at the end of 6 years and OMR 6700 at the end of 10 years. Calculate…

A: Present value of cash flows = Cash flows/(1+r)n r is discount rate n is time period of cash flows

Q: flows for an investment with an economic life of 5 years are as follows: k0 = -10000, k1 = k2 = k3 =…

A: The net present value is the difference between the present value of cash flow and initial…

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Present value if the discount rate if 5%

VIEW

If the discount rate is 15%?

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

What is the present value of end-of-year cash flows of 1000 per year, with the first cash flow received three years from today and the last one 10 years from today? Use a discount rate of 12 percent.
Consider the following cash flows. The interest rate is 10%. What is the total wealth after 2 years if you sell the rights to the remaining cash flows? Year 0 1 2 3 4 Cash flow 150 120 100 200
Investment X offers to pay you $5,400 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) If the discount rate is 21 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
A).$4500 will be paid 6 years and 10 months now. Find present value of payment if interest is at rate j2 = 9%. Use the practical metho. B). An investment fund guarantees to double your money in five years. What rate of j2 is implied ? C). If money doubles at certain rate of interest compound monthly in six years. How long will it take to the same amount of money to triple in valuy ?
Answer the following questions: 1) Consider the following cash flow: You will receive $500 at the end of years 3 and 4 and $1,000 at the end of year 5. If the interest rate is 7%, what amount received at the present is equivalent to this cash flow? 2) Given the cash flow in the figure below, and i=10% per year. Find V4 (or equivalent worth at n=4) $200 $150 $120 $100 $100 $80 Years 6. 3. 5 Base period 3) Given the cash flow in the figure below, and i=8% per year. Find V3, V4 and V5 (or equivalent worth at third, fourth and fifth year) Rs 500 Rs 400 Rs 300 Rs 200 Rs 80 Rs 80 Rs 40 Years 1 Base period 4) If you want to receive 100,000 $ after 5 years from your bank account, what is the amount that you have to deposit now, if the bank gives 10% interest accumulated annually? 5) A person deposits $5000 now in an account at 14% compounded annually. He wants to withdraw the money when it becomes $ 20,000. How long time will he wait for?
What excel function do I use? Or is there a equation? I tried referring to the other answer on bartleby but it is wrong
2. Suppose you expect to receive the following future cash flows at the end of the years indicated: GHC 1800 in year 2, GHC 4200 in year 4, GHC 2,700 in year 5, and GHC 9000 in year 9. If the interest rate is 9% per year, what is the value of the four flows at year 3?
Suppose you would get OMR 5000at the end of 6 years and OMR 6700 at the end of 10 years. Calculate present value of both the cash inflows using 7.05% discount rate. .a 6500. b. 6700 C 671244 d. 2710.40
Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent?
Find the value of X so that the present value of the following cash flow is equal to $70,000. Consider an interest rate of 10% per year.(answer: 6587.15) End of year 1 2 3 4 5 6 7 8 9 10 Cash flow 3,000 4,000 6,000 10,000 X 14,000 16,000 18,000 20,000 22,000
How much will you need to invest today to get the following cash flows at a discount rate of 8.25%: Y1: $1,500 Y2: $1,700 Y3: $2,500 b) What is the total value of the cash flows given in (a) at the end of 3 years at a discount rate of 6.2 %? c) Alfred has the option of choosing between two savings accounts one with which pays 7.15% with quarterly compounding and another with 7% with monthly compounding. Which account should he use? Please answer fast I give you upvote

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS