A security will pay $300 in one year and $700 in two years. Ifthe appropriate...

A security will pay $300 in one year and $700 in two years. If the appropriate discount rate is 9.1% per year, what is the value of the security today?

Question 11 options:

	1)$863.07
	2)$856.98
	3)$852.41
	4)$873.48
	5)$841.16

Expert Solution

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= -$0.
Cash flow for all the years should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow, press the NPV button and enter the discount rate of 9.1%.
Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 9.1% the discount rate is $863.07.

Hence, the answer is option 1.

jeff jeffy answered 2 years ago

What's the present value of $7,500 discounted back 5 years ifthe appropriate interest rate is...

What's the present value of $7,500 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?

A perpetuity will pay $700 per year, starting 6 years after the perpetuity is purchased.

A perpetuity will pay $700 per year, starting 6 years after the perpetuity is purchased. What is the present value (PV) of this perpetuity on the day that it is purchased (conside this time 0), given that the annual interest rate is 5%? $10,447.02 $10,969.37 $522.35 $14,000.00

You expect that Walmart will pay dividends 1.5 in one year, 2.8 in two years and...

You expect that Walmart will pay dividends 1.5 in one year, 2.8 in two years and 4.9 in three years. After that dividends will grow at 3.4% per year and investors required rate of return is 7.3%. According to the dividend discount model what should be the price of Walmarts stocks?

You expect GDL to pay a dividend of $2 in one year, $3 in two years...

You expect GDL to pay a dividend of $2 in one year, $3 in two years and $5 in 3 years. After that, you think dividends will grow at a constant rate of 6%. You require a return of 9% to invest in GDL. How much would you pay for a share of the company today? Answer to 2 decimal places, for example 39.12.

A court has ordered Security Enterprises to pay 200000 in two years and 500000 in five...

A court has ordered Security Enterprises to pay 200000 in two years and 500000 in five years. In order to meet this important liability, they wish to invest in a combination of two-year 10% par-value bonds with annual coupons and five-year zero-coupon bonds. Each of these is sold to yield an annual effective yield of 4%. how much of each type of bond should be purchased so that the present value and duration conditions of Redington immunization are satisfied at...

An investment is scheduled to pay $1,000 one year from now; $2,000 two years from now;...

An investment is scheduled to pay $1,000 one year from now; $2,000 two years from now; $3,000 three years from now, and this pattern is expected to remain the same in perpetuity (i.e., $1,000 on t=4; $2,000 on t=5; $3,000 on t=6; etc.). If the discount rate on the project is 8% (effective annual rate), what is the present value of the investment. A. $79,080 B. $75,050 C. $28,306 D. $24,360

Susan is able to pay $300 a month for 4 years on a car loan. If...

Susan is able to pay $300 a month for 4 years on a car loan. If the interest rate is 4.8% per year, how much can she afford to borrow to buy a car? Group of answer choices $13,078.27 $12,824.95 $15,840.49 $15,470.38

An investment will pay $150 at the end of each of the next 3 years, $300...

An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $350 at the end of Year 5, and $450 at the end of Year 6. If other investments of equal risk earn 6% annually, what is this investment's present value? Its future value?

Kristi is considering an investment that will pay $7,500 a year for eight years, starting one...

Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today. How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer Kristi was offered three (3) different assets, as listed below:  Asset 1 pays annual interest rate of 9% compounding annually.  Asset 2 pays annual interest rate of 8.9% compounding semi-annually.  Asset 3 pays interest...

loretta buys a one-year debt security on 12/31/2002 for $10,000 which will pay her a nominal...

loretta buys a one-year debt security on 12/31/2002 for $10,000 which will pay her a nominal interest rate of 5% from 12/31/2002 to december 12/31/ 2003m the inflation rate is 2% , loretta has a tax rate of 40% 1- how much nominal interst does she earn in one year ? 2- how much does loretta pay in taxes on her interest income? 3- how much is after- tax nominal income for loretta ? 4- how much principle does loretta...

Question