A. $1,318.06 B. $1,297.16 C. $1,276.75 D. $1,256.81 E. $1,237.31 F. $1,218.26 G. $1,199.63 H. $1,181.43 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 9.5% 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 C. $1,276.75 D. $1,256.81 E. $1,237.31 F. $1,218.26 G. $1,199.63 H. $1,181.43 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 9.5% 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?
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
Transcribed Image Text:A.
$1,318.06
B.
$1,297.16
C.
$1,276.75
D.
$1,256.81
E.
$1,237.31
F.
$1,218.26
G.
$1,199.63
H.
$1,181.43
Transcribed Image Text: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 9.5% 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?
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