CFIN
5th Edition
ISBN: 9781305661639
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 15PROB
Summary Introduction
The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The
Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.
Here,
The present value is “PV”.
The annual payment on investment is “PMT”.
The interest rate is “r”.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Help please
How should the $70,000 be allocated to each alternative to maximize annual return? What is the annual return?
What is the present value of an investment that will pay $1,000 in one year's time, and $1,000 every year after that, when the interest rate is 8%?
Chapter 4 Solutions
CFIN
Ch. 4 - Prob. 1PROBCh. 4 - Prob. 2PROBCh. 4 - Prob. 3PROBCh. 4 - Prob. 4PROBCh. 4 - Prob. 5PROBCh. 4 - Prob. 6PROBCh. 4 - Prob. 7PROBCh. 4 - Prob. 8PROBCh. 4 - Prob. 9PROBCh. 4 - Prob. 10PROB
Ch. 4 - Prob. 11PROBCh. 4 - Prob. 12PROBCh. 4 - Prob. 13PROBCh. 4 - Prob. 14PROBCh. 4 - Prob. 15PROBCh. 4 - Prob. 16PROBCh. 4 - Prob. 17PROBCh. 4 - Prob. 18PROBCh. 4 - Prob. 19PROBCh. 4 - Prob. 20PROBCh. 4 - Prob. 21PROBCh. 4 - Prob. 22PROBCh. 4 - Prob. 23PROBCh. 4 - Prob. 24PROBCh. 4 - Prob. 25PROB
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?arrow_forwardSuppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? a. What is the internal rate of return (IRR) of this opportunity? The IRR of this opportunity is%. (Round to two decimal places.) b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? The periodic payment that gives the same IRR is $ (Round to the nearest cent.)arrow_forwardAn investment opportunity requires a payment of $620 for 12 years, starting a year from today. If required rate of return is 6.00 percent, what is the value of the investment to you today?arrow_forward
- 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 $500 at the end of Year 6. If other investments of equal risk earn 8 percent annually, what is its present value? Its future value?arrow_forwardWhat is the value of an investment opportunity that will pay GH¢5,060 next year, GH¢5,500 the year after and GH¢7,800 in the third year, assuming similar investment has a return of 14.5%?arrow_forwardSuppose you invest $385 at the end of each of the next eight years. (a) If your opportunity cost rate is 7 % compounded annually, how much will your investment be worth after the last $385 payment is made? (b) What will be the ending amount if the payments are made at the beginning of each year?arrow_forward
- An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If the rate of interest earned on the investment is 8%, what is the present value of this investment? What is its future value? How do you solve this with excel?arrow_forwardAn investment pays you $1000 at the end of each of the next 3 years. The investment will then pay you $2000 at the end of Year 4, $3000 at the end of Year 5, and $5000 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?arrow_forwardSuppose an initial investment of $100 will return $50/year for three years (assume the $50 is received each year at the end of the year). Is this a profitable investment if the discount rate is 20%?arrow_forward
- You are valuing an investment that will pay you $26,000 per year for the first 4 years, $36,000 per year the next 11 years, $49,000 per year the next 17 years, and $45,000 per year the following 10 years (all payments are at the end of each year). If the appropriate annual discount rate is 6.00%, what is the value of the investment to you today?arrow_forwardFind the future value of the given present value. Use 360 days per year for your calculation.The present value of $3684 at 11% for 240 days.arrow_forwardAssume that at the beginning of the year, you purchase an investment for $6,500 that pays $95 annual income. Also assume the investment's value has increased to $7,050 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT