The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow $50,000 ($2.000) 1 Q ($5,100) 3Q ($4,500) 3 $1,600 (36Q) $0 $0 4 5 12Q ($8,500) 6. 20Q ($4,500) 7 $7,500 ($6,500) $0 8 (16Q) a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will the cash flow have equivalence? (Hint: for what value of Q. NPW is equal to zero)
The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow $50,000 ($2.000) 1 Q ($5,100) 3Q ($4,500) 3 $1,600 (36Q) $0 $0 4 5 12Q ($8,500) 6. 20Q ($4,500) 7 $7,500 ($6,500) $0 8 (16Q) a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will the cash flow have equivalence? (Hint: for what value of Q. NPW is equal to zero)
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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Please do it in excel s
Transcribed Image Text:The cash flow for a company for their investment account is shown in the table
below:
Cash
Year Cash Inflow
Outflow
$50,000
($2,000)
1
($5,100)
3Q
($4,500)
$1,600
(36Q)
4
$0
$0
12Q
($8,500)
20Q
($4,500)
7
$7,500
($6,500)
8
$0
(16Q)
a. If the value of Q is $2,750 at what interest rate will the net cash flow be
balanced and equivalent? (Hint: at what interest rate per year NPW is equal to
zero)
b. If the interest rate is 6% per year compounded yearly, for what value of Q will|
the cash flow have equivalence? (Hint: for what value of Q. NPW is equal to zero)
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