Of the following five investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero. 1.Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments). 2.Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20payments). 3.Investment D pays $2,500 at the end of 10 years (just one payment). 4.Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10payments). Please explain answer.
Of the following five investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero. 1.Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments). 2.Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20payments). 3.Investment D pays $2,500 at the end of 10 years (just one payment). 4.Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10payments). Please explain answer.
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
Related questions
Question
Of the following five investments, which would have the lowest present value? Assume that the effective annual rate for all investments is the same and is greater than zero.
1.Investment A pays $250 at the end of every year for the next 10 years (a total of 10 payments).
2.Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20payments).
3.Investment D pays $2,500 at the end of 10 years (just one payment).
4.Investment E pays $250 at the beginning of every year for the next 10 years (a total of 10payments).
Please explain answer.
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!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
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