Investment X offers to pay you $7,100 per year for 10 years, whereas Investment Y offers...

Investment X offers to pay you $7,100 per year for 10 years, whereas Investment Y offers to pay you $8,200 per year for 8 years.

Requirement 1:

(a)

Assume the discount rate is 8 percent, what is the present value of these cash flows? (Do not include the dollar signs ($). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Present value
Investment X	$
Investment Y	$

(b)	Which of these cash flow streams has the higher present value?

	(Click to select)Investment YInvestment X

Requirement 2:

(a)

Assume the discount rate is 20 percent, what is the present value of these cash flows? (Do not include the dollar signs ($). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Present value
Investment X	$
Investment Y	$

(b)	Which of these cash flow streams has the higher present value?

	(Click to select)Investment XInvestment Y

Solutions

Expert Solution

jeff jeffy answered 1 year ago

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