The management of Bright star Investments Ltd is assessing an investment plan. The company wants to know the interest rate that will quadruple an initial investment in 12 years. What is the required interest rate? a. 12.25% b. 14.87% c. 10.75% d. 18.92%
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- What is the rate of return (the interest rate) on an investment today of $30,626.24 if the company expects to receive $45,000 in 5 years? а. 9% O b. 8% С. 6% d. 7%Fenton, Inc., has established a new strategic plan that calls for new capital investment. The company has a 9.8% required rate of return and an 8.3% cost of capital. Fenton currently has a return of 10% on its other investments. The proposed new investments have equal annual cash inflows expected. Management used a screening procedure of calculating a payback period for potential investments and annual cash flows, and the IRR for the 7 possible investments are displayed in image. Each investment has a 6-year expected useful life and no salvage value. A. Identify which project(s) is/are unacceptable and briefly state the conceptual justification as to why each of your choices is unacceptable. B. Assume Fenton has $330,000 available to spend. Which remaining projects should Fenton invest in and in what order? C. If Fenton was not limited to a spending amount, should they invest in all of the projects given the company is evaluated using return on investment?Your investment will pay you the following cash flow stream: YEAR | CASH FLOW 1 |200 2 10 3 100 4 100 If your required rate of return is 12%, what is the value (i. e., present value ) of this investment at time 0? What is the future value at the end of year 7? Please explain in steps to input on BA II Plus calculator
- Suppose you makes a $1,000 initial investment today, a $4,000 additional investment at the end of year one, and another $500 investment at the end of year two. You had returns of 10% in year one, 2% in year two, and -5% in year three. What is the dollar-weighted average return on your investments? Select one: a. -2.59% b. 10.00% c. 0.51% d. -0.73% e. 3.00%Assume you invest $5,100 today in an investment that promises to return $6,928 in exactly 10 years. a. Use the present-value technique to estimate the IRR on this investment. b. If a minimum annual return of 9% is required, would you recommend this investment? #69 Part 1 a. The IRR of the investment is enter your response here%. (Round to the nearest whole percent.) Part 2 b. If a minimum return of 9% is required, would you recommend this investment? (Select the best choice below.) A. No, because this investment yields less than the minimum required return of 9%. B. Yes, because a minimum required return of 9% does not compensate for an investment that lasts longer than one year. C. No, because a minimum required return of 9% is an arbitrary choice for an investment of this risk level. D. Yes, because this investment yields more than the minimum required return of 9%What is the internal rate of return (IRR) of an investment that requires an initial investmen of $11,000 today and pays $15,400 in one year's time?
- Quilts R Us (QRU) is considering an investment in a new patterning attachment with the cash flow profile shown in the table below. QRU’s MARR is 13.5%/year. Solve, a. What is the annual worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on annual worth? c. Should QRU invest?Calculate the duration for the following cash flows of an investment. Given the market interest rates are 10%. Year 1 2 3 4 7 8 Cash flow 140 150 160 170 180 190 200 250An investment company is considering one of two possible business ventures. Project 1 gives a return of $250 000 in four years’ time, whereas Project2 gives a return of $350 000 in eight years’ time. Which project should thecompany invest in when the interest rate is 7% compounded annually?
- (a)An investment is offered whereby £1000 is invested immediately, £2000 is invested in exactly threeyears’ time followed by a further investment of £3000 after a further threeyears. The investment is due to return £10000 in ten years’ from now. (i)Write down the equation of valuefor the investment (ii) Estimatethe yield on the investment. (b) (i)Calculate the present value, at a rate of interest of 6.5% per annum effective, of anannuity where £5000 is paidat the end of the first year, £4,800 is paid at the end ofthe second year, £4,600 is paid at the end of the third year and so on, with paymentsdecreasing by £200 per annum until the payment stream ends afterof 10 years. (ii)What would the payments be for an investment with the same present value, with equal payments every month?Please show working Please answer a , b and c a. An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 9% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent. Present value: $ __________ Future value: $ ___________ b. Your parents will retire in 20 years. They currently have $340,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places. ___________ % c. If you deposit $2,000 in a bank account that pays 8% interest annually, how much will be in your account after 5 years? Do not round intermediate calculations. Round your answer to the nearest cent.3. An investment promises two payments of $500, on dates 3 and 6 months from today. If the required return on investment is 9%: a) What is the value of the investment today?