Question 4 of 9 lan purchased two trucks for his warehouse for a total of $58,000. This investment saved him $14,000 every year for 11 years. At the end of year 11, he sells both the trucks for a total of $10,500. a. What is the Net Present Value (NPV) of the investment if the required rate of return is 8%? Round to the nearest cent b. Does the investment meet the required rate of return? Yes No

Question 4 of 9 lan purchased two trucks for his warehouse for a total of $58,000. This investment saved him $14,000 every year for 11 years. At the end of year 11, he sells both the trucks for a total of $10,500. a. What is the Net Present Value (NPV) of the investment if the required rate of return is 8%? Round to the nearest cent b. Does the investment meet the required rate of return? Yes No

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(a) Currently, Eric has $100,000 and her investment horizon is 8 years (i.e., all investments will be terminated at the end of year 8). He is considering one of the following investments products being offered by his private banker from OCBC Bank:• Greentech Fund: First year return is 4% per year, and this will increase by 1% each year for the next four years. Thereafter, returns will remain constant.• Net-zero Fund: Investment can only be made two years later (i.e., His money is in the bank for the first 2 years). When the investment is made, the return on the first three years is 6% per year and 12% per year thereafter.Interest of 3% per year (compounded monthly) can be earned if Eric deposits her money in an OCBC savings account.Analyze which is a better investment product. You are required to show all relevant workings (b) SingLife is offering an endowment policy where Eric, aged 40 today, will need to make the following payments:• 41st…
QUESTION 10 Beatrice owns two investments, A and B, that have a combined total value of $28,100.00. Investment A is expected to pay $25,180.00 in 4 years from today and has an expected return of 12.77 percent per year. Investment B is expected to pay $21,594.06 in 5 years from today and has an expected return of R per year. What is R, the expected annual return for investment B? O 11.50% (plus or minus 10bps) O 14.58% (plus or minus 10bps) O 10.73% (plus or minus 10bps) O 9.50% (plus or minus 10bps) O none of the answers are within 10bps of the correct answer
aa.4
QUESTION 1 Raul owns two investments, A and B, that have a combined total value of $27,500.00. Investment A is expected to pay $23,540.00 in 4 years from today and has an expected return of 12.40 percent per year. Investment B is expected to pay $23,722.38 in 6 years from today and has an expected return of R per year. What is R, the expected annual return for investment B? O 10.90% (plus or minus 10bps) O 13.22% (plus or minus 10bps) O9.45% (plus or minus 10bps) O 9.27% (plus or minus 10bps) O none of the answers are within 10bps of the correct answer
1. Your client has been offered the opportunity to invest in a project which will pay $1,000 per month at the end of months 1 to 10 and $2,000 per month at the end of months 21 to 30. The interest rate over the period of the investment is a nominal rate of 8% p.a. If your client can buy the investment today for $25,000 would you recommend that this is a good investment? Why or why not?
Y8
QUESTION 3 Discuss the meaning of "the present value of a future amount"? Give the general equation for present value? a. Farizal intends to buy a new car, the Myvi for RM57,650, but only has RM20,000 in cash. How many years will it take for RM20,000 to grow to RM57,650 if it is invested at 10% interest compounded annually? b. Wahida has decided to invest RM1,000 for two years in a savings account paying 6% interest compounded semi-annually. Compute the future value of Wahida's investment? C. d. Sharifah Aminah receives a mixed stream of cash flows from an investment over the next five years: Year Cash Flow (RM) 5,000 6,500 4,500 5,200 5,800 1 What is the initial amount that Sharifah Aminah should invest if the required return is 10%? 2345
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