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QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% D0.8930,885 0.877 0.87 21.69 1.668 1.647 1.626 32.4022.361 2.322 2.283 43.0372.974 2.914 2.855 $3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% D0.8930.885 0.877 0.87 20.7970.7830.7690.756 30.7120.693 0.675 0.658 0.636 0.6130.592 0.572 50.567 0.5430.5190.497

QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% D0.8930,885 0.877 0.87 21.69 1.668 1.647 1.626 32.4022.361 2.322 2.283 43.0372.974 2.914 2.855 $3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% D0.8930.885 0.877 0.87 20.7970.7830.7690.756 30.7120.693 0.675 0.658 0.636 0.6130.592 0.572 50.567 0.5430.5190.497

Essentials Of Investments
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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90:-7 Assignment 3 Q of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 2 1.69 6 32.402 2.361 2.322 2.283 43.037 2.974 2.914 2.855 53.605 3.5173.433 3.352 1.6681.6471.62 Present value of $1: 12% 13% 14% 15% 0.8930.885 0.877 0.87 20.7970.783 0.7690.756 30.712 0.6930.675 0.658 40.636 0.6130.592 0.572 0.5670.5430.519 0.497 s Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project SR875,000 Investment Residual value Operating income: Year I 120,000 Year 2 120,000 Year 3 120,000 Year 4 120,000 Year 5 120,000 Q3/ Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 per year at the end of each of the next seven years 2. $48,350 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirements 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar.
Transcribed Image Text:90:-7 Assignment 3 Q of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 2 1.69 6 32.402 2.361 2.322 2.283 43.037 2.974 2.914 2.855 53.605 3.5173.433 3.352 1.6681.6471.62 Present value of $1: 12% 13% 14% 15% 0.8930.885 0.877 0.87 20.7970.783 0.7690.756 30.712 0.6930.675 0.658 40.636 0.6130.592 0.572 0.5670.5430.519 0.497 s Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project SR875,000 Investment Residual value Operating income: Year I 120,000 Year 2 120,000 Year 3 120,000 Year 4 120,000 Year 5 120,000 Q3/ Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 per year at the end of each of the next seven years 2. $48,350 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirements 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar.
10:.0 Assignment 3 Q Assignment 3 Ch.5 Name / ID/ Section / Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 10.8930.885 0.877 0.87 2 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 43.037 2.974 2.914 2.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.885 0.877 0.87 20.7970.7830.769 0.756 30.7120.693 0.675 0.658 40.6360.6130.592 0.572 0.567 0.5430.5190.497 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project Investment SR875,000 Residual value Operating income: 120,000 Year I Year 2 120,000 Year 3 120,000 Year 4 120,000 Year S 120,000 Q3/ Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 per year at the end of each of the next seven years 2. $48,350 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirements 1. Calculate the pcont valua efanah saenario using IUL 1
Transcribed Image Text:10:.0 Assignment 3 Q Assignment 3 Ch.5 Name / ID/ Section / Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 10.8930.885 0.877 0.87 2 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 43.037 2.974 2.914 2.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.885 0.877 0.87 20.7970.7830.769 0.756 30.7120.693 0.675 0.658 40.6360.6130.592 0.572 0.567 0.5430.5190.497 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project Investment SR875,000 Residual value Operating income: 120,000 Year I Year 2 120,000 Year 3 120,000 Year 4 120,000 Year S 120,000 Q3/ Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 per year at the end of each of the next seven years 2. $48,350 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirements 1. Calculate the pcont valua efanah saenario using IUL 1
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