To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year. Introduction: The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Question

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Answer 1

Question

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

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Consider the following alternatives: i. $100 received in one year ii. $220 received in 5 years iii. $330 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. b. What is your ranking if the interest rate is only 6% per year? c. What is your ranking if the interest rate is 19% per year? a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. First, calculate the present value (PV) of each alternative: The PV of $100 received in one year if the interest rate is 7% per year is $ (Round to the nearest cent.)

Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $____. (Round to the nearest cent.)

1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)

Answer 2

Question

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

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Answer 3

Question

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

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Answer 4

Question

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

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Answer 5

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 6

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 7

Chapter 4, Problem 6P

a)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 8

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 9

b)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 10

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 11

c)

Summary Introduction

To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.

Introduction:

The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4.1 - Prob. 1CC Ch. 4.1 - Prob. 2CC Ch. 4.2 - Prob. 1CC Ch. 4.2 - Prob. 2CC Ch. 4.2 - Prob. 3CC Ch. 4.3 - Prob. 1CC Ch. 4.3 - Prob. 2CC Ch. 4.4 - Prob. 1CC Ch. 4.4 - What benefit does a firm receive when it accepts a...Ch. 4.5 - How do you calculate the present value of a a....

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