(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment Alternatives End of Year 1 2 3 A B C $10,000 $10,000 10,000 10,000 10,000 10,000 $10,000 10,000 50,000 10,000 10,000 10,000

(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment Alternatives End of Year 1 2 3 A B C $10,000 $10,000 10,000 10,000 10,000 10,000 $10,000 10,000 50,000 10,000 10,000 10,000

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 2 You are considering investing in two different investment options. The first option offers no return for the first three years, but afterward it offers to pay you $20,000 per year for four years. The second option offers to pay you $20,000 per year for three years and $30,000 in the fourth year. All payments are made at year-end. If a discount rate of 8% per annum is assumed, determine by using the present value the option that offers you a higher return.
Chapter 2 Question 4 Assume a 0.05 time value of money. The sum of $100 received immediately is equivalent to what quantity received in 10 equal annual payments, the first to be received one year from now? What would be the annual amount if the first of 10 payments were received immediately?
Vijay
QUESTION 109 If $200 is invested at the end of each year for 8 years at a rate of 12% what will the ending value of the investment be? TRUE OR FALSE
Question 11
QUESTION 11 A 30 year 1/1 ARM has an initial rate of 3.75%. In the future, the rate will reset to 325 basis points above the LIBOR index with no rate caps or floors. In 1 year, at the time of the first reset, the LIBOR is 1%. What will be the fully indexed rate at the first reset? OA. 7.00% O B. 1.00% O C. 4.75% O D.4.25%
Question 6 How long would it take you to double your money in an investment if it Earns 3.75% compounded quarterly ? Answer should be be rounded to the nearest months
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
6f

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