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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Question 1: Present Value of an Uneven Stream of Payments
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
|
End of Year |
A |
B |
C |
|
1 |
$2,000 |
$2,000 |
$5,000 |
|
2 |
3,000 |
2,000 |
5,000 |
|
3 |
4,000 |
2,000 |
(5,000) |
|
4 |
(5,000) |
2,000 |
(5,000) |
|
5 |
5,000 |
5,000 |
15,000 |
What is the present value of each of these three investments if the appropriate discount rate is 10 per cent?
Transcribed Image Text:Question 1: Present Value of an Uneven Stream of Payments
You are given three investment alternatives to analyze. The cash flows from these three
investments ae as follows:
End of Year
A
C
$2,000
3,000
1
$2,000
$5,000
5,000
(5,000)
(5,000)
2,000
3
4,000
2,000
4
(5,000)
2,000
5,000
5,000
15,000
What is the present value of each of these three investments if the appropriate discount
rate is 10percent?
Answer:
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