QUESTION 16 You are evaluating an investment that promises a series of varying annual payouts over the next five years. Specifically, the investment will yield $200 at the end of the first year, $200 at the end of the second year, $300 at the end of the third year, $400 at the end of the fourth year, and then a final payout of $600 at the end of the fifth year. Given the current market conditions, you can expect an annual return of 11.0% on investments carrying a similar risk profile. What is the present value of this investment opportunity, i.e., the total present value of the series of payments you will receive? A. $1,318.06 B. $1,297.16 OC. $1,276.75 D. $1,256.81 E. $1,237.31 F. $1,218.26 OG. $1,199.63 OH. $1,181.43
QUESTION 16 You are evaluating an investment that promises a series of varying annual payouts over the next five years. Specifically, the investment will yield $200 at the end of the first year, $200 at the end of the second year, $300 at the end of the third year, $400 at the end of the fourth year, and then a final payout of $600 at the end of the fifth year. Given the current market conditions, you can expect an annual return of 11.0% on investments carrying a similar risk profile. What is the present value of this investment opportunity, i.e., the total present value of the series of payments you will receive? A. $1,318.06 B. $1,297.16 OC. $1,276.75 D. $1,256.81 E. $1,237.31 F. $1,218.26 OG. $1,199.63 OH. $1,181.43
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:QUESTION 16
You are evaluating an investment that promises a series of varying annual payouts over the next five years. Specifically, the investment will yield $200 at the end of the first year, $200
at the end of the second year, $300 at the end of the third year, $400 at the end of the fourth year, and then a final payout of $600 at the end of the fifth year. Given the current
market conditions, you can expect an annual return of 11.0% on investments carrying a similar risk profile. What is the present value of this investment opportunity, i.e., the total
present value of the series of payments you will receive?
A. $1,318.06
B. $1,297.16
OC. $1,276.75
D. $1,256.81
E. $1,237.31
F. $1,218.26
OG. $1,199.63
OH. $1,181.43
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