You are offered an investment with the following conditions: the cost of the investment is $1,000 and it pays out a sum of X at the end of the first year. The payout grows at the rate of 10% per year for 11 years, after which the payouts cease. If your discount rate is 15%, calculate the smallest X that would entice you to purchase the asset.
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- An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6. A. If other investments of equal risk earn 4% annually, what is its present value? Round your answer to the nearest cent. B. If other investments of equal risk earn 4% annually, what is its future value? Round your answer to the nearest cent.An investment offers $966 per year for 11 years, with the first payment occurring Zyears from now. If the required return is 9 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period O by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=9 FV=Present value of annuity you found in step 1. And you solve for PV)Which of the following investments will have the highest future value atthe end of 10 years? Assume that the effective annual rate for allinvestments is the same. a. Investment E pays $250 at the end of every year for the next 10 years (a total of 10 payments). b. Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments). c. Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments). d. Investment D pays $2,500 at the end of 10 years (a total of one payment). e. Investment A pays $250 at the beginning of every year for the next10 years (a total of 10 payments).
- What is the present value of an investment that pays $190 at the end of year 1, $107 at the year of year 2, and $235 at the end of year 3 if this investment earns 5% annually? your answer should be to the nearest dollar. For example, if your answer is id=mce_marker50, then input as 150.Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < XWhat is the correct option a b c d e ?? General AccountingAetna is offering customers who invest $10,000 with them today a payment of $1,500 every 1.5 years in perpetuity. If the first payment will be made 1.5 years from today, what is the effective annual rate (EAR) of this investment opportunity?An example of how to calculate net present value is done using the following. Imagine you have been given an investment opportunity wherein if you invest $1,200 today, you will receive $650 dollars at the end of each year for the next 5 years. You could separately choose to invest your money at 10% interest each year. Should you take the investment opportunity? To find the answer, use the NPV formula:You are considering a 10 year investment plan in which your target is $150,000. There are two options available for you: Option 1: Putting exactly an equal amount of money into an investment fund at the end of each year for 10 years with the rate of return of 8%, annually compounding. Option 2: Putting your initial investment of $50,000 in an asset that will pay you 9% rate of return, compounding quarterly for the first 6 years. The rate of return, compounding annually for the last 4 years (the period from year 7 to the end of year 10) has not been defined yet. Required: Calculate the amount of money you should put into your investment fund each year in Option 1?You are considering a 10 year investment plan in which your target is $150,000. There are two options available for you: Option 1: Putting exactly an equal amount of money into an investment fund at the end of each year for 10 years with the rate of return of 8%, annually compounding. Option 2: Putting your initial investment of $50,000 in an asset that will pay you 9% rate of return, compounding quarterly for the first 6 years. The rate of return, compounding annually for the last 4 years (the period from year 7 to the end of year 10) has not been defined yet. Required: Compute the effective annual interest rate (EAR) in the first 6 years in Option 2? Compute the annually compounding rate of return you should target for your asset in the following 4 years to get $150, 000 at the end of year ten in Option 2?Investment A requires you to pay $30,000 at t = 0 and you will receive $49,000 after five years. Investment B costs $73,000 and provides a cash flow of $128,000 after seven years. What is the rate of return for each of the two investments?Suppose you find an annuity that pays 8% annual interest, compounded annually. If you invest in this annuity and contribute $10, 000 annually for 10 years, how much money will be in the annuity after 10 years? Enter your answer rounded to the nearest hundred dollars and omit the dollar sign and comma (For example $122, 570.21 should be input as 122600.) Provide your answer below:SEE MORE QUESTIONS
