Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,750 a year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $98,650 (lump sum) seven years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value (Click the icon to view the future value factor table.) (Click the icon to view the future value annuity factor table.) factor table.) GETTI Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1

Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,750 a year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $98,650 (lump sum) seven years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value (Click the icon to view the future value factor table.) (Click the icon to view the future value annuity factor table.) factor table.) GETTI Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1

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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you have just won the lottery and will receive $460,000 in one year. you will receive payments for 21 years, and the payments will increase 4 percent per year. if the appropriate discount rate is 11 percent, what is the present value of your winnings? Please explain how to solve using the financial calculator to show and explain steps thanks
Your grandmother would like to share some of her fortune with you. She offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 a year at the end of each of the next eight years 2. $48,350 (lump sum) now 3. $98,650 (lump sum) eight years from now Calculate the present value of each scenario using an 8% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the future value factor table.) Using an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1 $ 49,137 Present value of Scenario 2 $ Present value of Scenario 3 $ 48,350 53,271 Which scenario yields the highest present value? Scenario 3…
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I
Your grandfather has offered you a choice of one of the three following alternatives: $10,000 now; $4,800 a year for eight years; or $56,000 at the end of eight years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. Assuming you could earn 9 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.) a-2. Which alternative should you choose? multiple choice 1 $56,000 received at end of eight years $4,800 received each year for eight years $10,000 received now b-1. If you could earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.) b-2. Which alternative should you choose? multiple choice 2 $56,000 received at end of eight years $4,800 received each year…
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Suppose an investor, Erik, is offered the investment opportunities described in the table below. Each investment costs $1,000 today and provides a payoff, also described below, one year from now. Option Payoff One Year from Now 1 100% chance of receiving $1,100 2 50% chance of receiving $1,000; 50% chance of receiving $1,200 3 50% chance of receiving $200; 50% chance of receiving $2,000 If Erik is risk averse, which investment will he prefer? The investor will choose option 1. The investor will choose option 2. The investor will choose option 3. The investor will be indifferent toward these options. Which kind of stock is most affected by changes in risk aversion? High-beta stocks Low-beta stocks All stocks are affected the same, regardless of beta. Medium-beta stocks
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