You receive a phone proposal to invest in a new business. The caller informs you that it will take a $70,000 down payment and the investment will earn $10,000 a year for the next 10 years. He tells you that the investment will return 14 percent. a) If current interest rates are 8 percent, what is the present value of the investment? (Please provide in excel with explanation of the math) b) How did the caller get 14 percent?
You receive a phone proposal to invest in a new business. The caller informs you that it will take a $70,000 down payment and the investment will earn $10,000 a year for the next 10 years. He tells you that the investment will return 14 percent. a) If current interest rates are 8 percent, what is the present value of the investment? (Please provide in excel with explanation of the math) b) How did the caller get 14 percent?
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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#2 You receive a phone proposal to invest in a new business. The caller informs you that it will take a $70,000 down payment and the investment will earn $10,000 a year for the next 10 years. He tells you that the investment will return 14 percent.
a) If current interest rates are 8 percent, what is the
b) How did the caller get 14 percent?
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