Question

In: Finance

An investment offers $13800 per year for 5 years, with the first payment occurring 8 years...

An investment offers $13800 per year for 5 years, with the first payment occurring 8 years from now. If the required return is 15 percent, what is the value of the investment?

Solutions

Expert Solution

Discount rate 15.0000%
Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow
                             -   0                                            -                                           -  
                             -   1                                            -                                           -  
                             -   2                                            -                                           -  
                             -   3                                            -                                           -  
                             -   4                                            -                                           -  
                             -   5                                            -                                           -  
                             -   6                                            -                                           -  
                             -   7                                            -                                           -  
           13,800.000 8                               4,511.24                            4,511.24
           13,800.000 9                               3,922.82                            8,434.07
           13,800.000 10                               3,411.15                          11,845.21
           13,800.000 11                               2,966.22                          14,811.43
           13,800.000 12                               2,579.32                          17,390.75

Value of investment = 17,390.75


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