You may use Excel to answer this question. Explain completely which investment you would invest in today given the following information: Year 0 1 2 3 4 5 6 Investment 1 Revenues Discount rate 4.5% 0 2,000 4,000 6,000 8,000 6,000 4,000 Costs 3,000 2,000 1,000 1,000 1,000 1,000 500 Year 0 1 2 3 4 5 6 Investment 2 Revenues Discount rate 3.5% 0 0 3,000 6,500 9,000 13,000 15,000 Costs 8,000 6,000 3,000 3,000 2,000 1,000 0 Assume the firm wants to maximize profits where: Profits = Revenue - Costs Please show work using the time value of money formula.
You may use Excel to answer this question. Explain completely which investment you would invest in today given the following information: Year 0 1 2 3 4 5 6 Investment 1 Revenues Discount rate 4.5% 0 2,000 4,000 6,000 8,000 6,000 4,000 Costs 3,000 2,000 1,000 1,000 1,000 1,000 500 Year 0 1 2 3 4 5 6 Investment 2 Revenues Discount rate 3.5% 0 0 3,000 6,500 9,000 13,000 15,000 Costs 8,000 6,000 3,000 3,000 2,000 1,000 0 Assume the firm wants to maximize profits where: Profits = Revenue - Costs Please show work using the time value of money formula.
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
![1. You may use Excel to answer this question. Explain completely which investment you
would invest in today given the following information:
Year
0
1
2
3
4
5
6
Investment 1
Revenues
Discount rate 4.5%
0
2,000
4,000
6,000
8,000
6,000
4,000
Costs
3,000
2,000
1,000
Year
1,000
500
0
1
2
1,000
3
1,000 4
5
6
Investment 2
Revenues
Discount rate 3.5%
0
0
3,000
6,500
9,000
13,000
15,000
Costs
8,000
6,000
3,000
3,000
2,000
1,000
0
Assume the firm wants to maximize profits where: Profits = Revenue - Costs
Please show work using the time value of money formula.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F523886fd-9f1e-45c6-8352-76bbd15be435%2Fd26bf464-ae32-4780-a5b7-c8a8ef40119e%2F5jmep6_processed.png&w=3840&q=75)
Transcribed Image Text:1. You may use Excel to answer this question. Explain completely which investment you
would invest in today given the following information:
Year
0
1
2
3
4
5
6
Investment 1
Revenues
Discount rate 4.5%
0
2,000
4,000
6,000
8,000
6,000
4,000
Costs
3,000
2,000
1,000
Year
1,000
500
0
1
2
1,000
3
1,000 4
5
6
Investment 2
Revenues
Discount rate 3.5%
0
0
3,000
6,500
9,000
13,000
15,000
Costs
8,000
6,000
3,000
3,000
2,000
1,000
0
Assume the firm wants to maximize profits where: Profits = Revenue - Costs
Please show work using the time value of money formula.
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