Following is a table for the present value of $1 at compound interest:Year6%10%12%10.9430.9090.89320.8900.8260.79730.8400.7510.71240.7920.6830.63650.7470.6210.567Following is a table for the present value of an annuity of $1 at compound interest:Year6%10%12%10.9430.9090.89321.8331.7361.69032.6732.4872.40243.4653.1703.03754.2123.7913.605Using the tables provided, if an investment is made now for $19,200 that will generate a cash inflow of $6,400 a year for the next4 years, the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%, isa. $6,400Ob. $20,288Oc. $19,200Od. $1,088

Given, The investment is $19,200 Cash inflow is $6,400. Rate is 10%

Using the tables provided, if an investment is made now for $19,200 that will generate a cash inflow of $6,400 a year for the nex: 4 years, the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%, is

Using the tables provided, if an investment is made now for $19,200 that will generate a cash inflow of $6,400 a year for the nex: 4 years, the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%, is

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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Pena Company is considering an investment of $30,485 that provides net cash flows of $9,000 annually for four years. (a) If Pena Company requires a 6% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. Required A What is the net present value of this investment? Years 1-4 Required B Net present value Net Cash Flows X PV Factor Present Value of Net Cash Flows S 0 Required B >
Calculate, to the nearest cent, the future value FV (in dollars) of an investment of $10,000 at the stated interest rate after the stated amount of time. 2% per year, compounded annually, after 13 years FV = $
Perez Company is considering an investment of $20,957 that provides net cash flows of $6,900 annually for four years. (a) What is the internal rate of return of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals. (b) The hurdle rate is 9%. Should the company invest in this project on the basis of internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B What is the internal rate of return of this investment? Present value factor Internal rate of return % Required A Required B
An investment advisor offers you a product thatwill deliver cash-flows at the end of each of thenext seven years. The first cashflow is $5,000and every year thereafter, the cashflow will growat a rate of 4%. If the annual interest rate is2%, what is the present value of thisopportunity?
Mike Derr Company expects to earn 8% per year on an investment that will pay $616,000 seven years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value Table Factor Present Value
How much invested now at 7% would be just sufficient to provide three payments, with the firstpayment in the amount of $10,000 occurring in year 2, then $7,500 occurring in year 4, and finally $4,000 in year eight? Draw the cash flow
An $80,000 investment yields an annual return of $14,814.81 the first year; thereafter, annual returns increase at an annual rate of 4%. Based on a MARR of 6%, what is the discounted payback period for the investment? Looking for n = years
An asset is expected to pay a cash flow of $10 every 6 months in perpetuity with the first cash flow occuring in one years' time.Similar investment opportunities have a required return of 8% compounded quarterly.What should be the price of the asset in exacly 2^1/2 years' time?
Development costs of a new product are estimated to be $100,000 per year for five years. Annual profits from the sale of the product, estimated to be $75,000, will begin in the fourth year and each year they will increase by ($10,000 + $10,000*4) through year 15. Compute the present value using an interest rate of 10%. Draw a cashflow diagram.
An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next 4 years. Following is a table for the present value of $1 at compound interest: Year 1 2 3 4 12% 0.943 0.909 0.893 0.870 0.890 0.826 0.797 0.756 0.840 0.751 0.712 0.658 0.792 0.683 0.636 0.572 0.747 0.621 0.567 0.497 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 15% 1 0.943 0.909 0.893 0.870 2 1.833 1.736 1.690 1.626 3 2.673 2.487 2.402 2.283 4 3.465 3.170 3.037 2.855 4.212 3.791 3.605 3.353 5 5 6% 10% % 15% What is the investment's internal rate of return?
Find the present value of a cash flow stream which pays $5000 at the end of every year for 15 years at an interest rate of 9%?
What is the present worth of cash flows that begin at $30,000 and decrease at 10% per year for 5 years? The interest rate is 15%.

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