Assignment 3Ch.5Name /ID/Section /Q1/ Ipswich Corporation isinvestment opportunity with the expected net cashinflows of $300,000 for four years. The residualvalue of the investment, at the end of four years,would be $70,000. The company uses a discount rateof 14%, and the initial investment is $290,000.Calculate the NPV of the investment.consideringanPresent value of an ordinary annuity of $1:12% 13% 14% 15%0.893 0.885 0.877 0.871.69 1.668 1.647 1.6262.402 2.361.322 2.2833.037 2.974 2.914 2.855Present value of $1:12% 13% 14% 15%0.893 0.885 0.877 0.87Q2/ A company is evaluating an investment. Thecompany uses the straight-line method ofdepreciation. Use the following information tocompute the accounting rate of return. Show yourcalculations and round to one decimal place.ProjectSR875,000InvestmentResidual valueOperating incomeYear I120,000Year 2120,000Year 3120,000Year 4120,000Year SQ3/ Your grandfather would like to share some of hisfortune with you. He offers to give you money underone of the following scenarios (you get to choose):1. $8,550 per year at the end of each of the next sevenyears2. $48,350 (lump sum) now3. $100,250 (lump sum) seven years from nowRequirements1. Calculate the present value of each scenario usingan 8% discount rate. Which scenario yields thehighest present value? Round to nearest wholedollar.

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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% 00.893 0.8850.877 0.87 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 3.037 2.974 2.9142.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 20.7970.783 0.769 0.756 30.7120.6930.675 0.658 0.6360.6130.592 0.572 0.5670.543 0.519 0.497

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% 00.893 0.8850.877 0.87 1.69 1.668 1.6471.626 32.402 2.3612.3222.283 3.037 2.974 2.9142.855 3.605 3.5173.4333.352 Present value of $1: 12% 13% 14% 15% 00.893 0.8850.877 0.87 20.7970.783 0.769 0.756 30.7120.6930.675 0.658 0.6360.6130.592 0.572 0.5670.543 0.519 0.497

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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