1. You expect to receive $4,400 upon your graduation and will invest your windfall at an...

2. McCann Co. has identified an investment project with the following cash flows. Year. Cash Flow 1. $950 2. 1,050 3. 1,330 4. 1,160 a. If the discount rate is 8 percent, what is the present value of these cash flows? b. What is the present value at 19 percent? c. What is the present value at 26 percent?

Solutions

Expert Solution

Question 1:

PV = Amount received = $4,400

FV = future value = $5,725

r = quarterly interest rate = 0.69%

n = number of quarters

FV = PV * (1+r)^n

$5,725 = $4,400 * (1+0.69%)^n

(1.0069)^n = 1.301136364

n = log(1.301136364) / log(1.0069)

n = 0.114322815 / 0.00298634086

n = 38.2819043 quarteres

Therefore, it will take 9.57 years to reach the sum $5,725

Question 2:

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

1. You expect to receive $4,400 upon your graduation and will invest your windfall at an...

1. You expect to receive $4,400 upon your graduation and will invest your windfall at an interest rate of 0.69 percent per quarter until the account is worth $5,725. How many years do you have to wait until you reach your target account value? 2. McCann Co. has identified an investment project with the following cash flows. Year. Cash Flow 1. $950 2. 1,050 3. 1,330 4. 1,160 a. If the discount rate is 8 percent, what is the present...

You expect to receive $10,000 at graduation in two years. Youplan on investing it at...

You expect to receive $10,000 at graduation in two years. You plan on investing it at 6 percent until you have $104,000. How long will you wait from now? 40.19 years 42.19 years 47.25 years 46.41 years 38.19 years

You expect to receive $14,500 at graduation in four years. You plan on investing it at...

You expect to receive $14,500 at graduation in four years. You plan on investing it at 10 percent until you have $84,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Number of years

You expect to receive $19,000 at graduation in two years. You plan on investing it at...

You expect to receive $19,000 at graduation in two years. You plan on investing it at 11 percent until you have $92,000. How long will you wait from now? a. 15.11 years b. 13.11 years c. 19.17 years/ d. 17.11 years e. 18.83 years

You expect to receive $15,000 at graduation in two years. You plan on investing it at...

You expect to receive $15,000 at graduation in two years. You plan on investing it at 12 percent until you have $104,000. How long will you wait from now?

A. You expect to receive $28,000 at graduation in two years. You plan on investing it...

A. You expect to receive $28,000 at graduation in two years. You plan on investing it at 9.75 percent until you have $163,000. How long will you wait from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Period __________ years B. An investment offers to quadruple your money in 36 months (don’t believe it). What rate per year are you being offered? (Do not round intermediate calculations and enter your answer as...

You expect to receive $9,000 at graduation in two years. You plan on investing it at...

You expect to receive $9,000 at graduation in two years. You plan on investing it at 12 percent until you have $110,000. How long will you wait from now? (Do not round your intermediate calculations.) 20.09 years 22.09 years 24.09 years 26.50 years 26.98 years

You expect to receive $9,100 at graduation in 2 years. You plan on investing this money...

You expect to receive $9,100 at graduation in 2 years. You plan on investing this money at 9.03 percent per year until you have $50,000. How many years from today will it be until this occurs? Group of answer choices 19.7 years 25.3 years 23.3 years 21.7 years

Upon graduating from college, your parents host a graduation party in celebration for you at their...

Upon graduating from college, your parents host a graduation party in celebration for you at their house. 50 of your friends attend along with several family members and neighbors. At the end of the party everyone is departing the house. As the last guests filter out the front door, you thank them for attending and close the door. 3 minutes later you hear a loud knock on the front door. You open the door and see that one of your...

Upon graduating from college, your parents host a graduation party in celebration for you at their...

Upon graduating from college, your parents host a graduation party in celebration for you at their house. 50 of your friends attend along with several family members. At the end of the party everyone is departing the house. As the last guests filter out the front door, you thank them for attending and close the door. 3 minutes later you hear a loud knock on the front door. You open the door and see that one of your trusted friends...

Subjects