Investments A and B have the net cash flows given. Value UI T Ior Which PW (1)c PW (1)p? 10. End of year 1 4. $ 75 -$250 -$250 $ 75 $150 $175 $ 75 $150 $ 75 В $150 Compare the present worth of A with the present worth of B for an in- terest rate of 5%. Which has the higher value? Answer: A If the interest rate is 15%, which has the higher value? Answer: B а. b. On the same axis, graph the present worth of each investment as a func tion of the interest rate. с. H.
Investments A and B have the net cash flows given. Value UI T Ior Which PW (1)c PW (1)p? 10. End of year 1 4. $ 75 -$250 -$250 $ 75 $150 $175 $ 75 $150 $ 75 В $150 Compare the present worth of A with the present worth of B for an in- terest rate of 5%. Which has the higher value? Answer: A If the interest rate is 15%, which has the higher value? Answer: B а. b. On the same axis, graph the present worth of each investment as a func tion of the interest rate. с. H.
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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Transcribed Image Text:Value UI T IUF WHich PW(1)c
PW (1)p?
10.
Investments A and B have the net cash flows given.
End of year
1
4.
$ 75
$ 75
$150
А
-$250
-$250
$175
$ 75
$150
$ 75
В
$150
Compare the present worth of A with the present worth of B for an in-
terest rate of 5%. Which has the higher value? Answer: A
If the interest rate is 15%, which has the higher value? Answer: B
а.
b.
On the same axis, graph the present worth of each investment as a func-
tion of the interest rate.
с.
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