6. You are looking at an investment that will pay $10,000 in 5 years if you...

6. You are looking at an investment that will pay $10,000 in 5 years if you invest $3000 today. What is the implied rate of interest?

Expert Solution

The implied interest rate is calculated using excel below:

jeff jeffy answered 1 year ago

Investment A offers to pay you $10,000 per year for 10 years while Investment B offers...

Investment A offers to pay you $10,000 per year for 10 years while Investment B offers to pay you $15,000 per year for 6 years. a. If the annual interest rate (compounded annually) is 10%, which investment is more valuable? b. Does your answer change if the annual interest rate (compounded annually) is 5%? c. At what interest rate are the two investments equally attractive?

Assume that you pay $10,000 to receive $2,000 per year in years 1 through 5. $3,000...

Assume that you pay $10,000 to receive $2,000 per year in years 1 through 5. $3,000 per years in years 6 through 8, and $4,000 in year 9, with cash flows to be received at the end of the year. If you require a 14% rate of return, what is the NPV of these cash flows? PLEASE EXPLAIN HOW TO DO THIS WITH A FINANCIAL CALCULATOR NOT THE FORMULA Step by step. Please give small details that you may think...

A- Annuity Present Value -You are looking into an investment that will pay you $12,000 per...

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

6. An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 6% annually, what is its present value? Round your answer to the nearest cent. If other investments of equal risk earn 6% annually, what is its future value? Round your answer to the nearest cent....

How do i solve the question below: You are looking at an investment that will pay...

How do i solve the question below: You are looking at an investment that will pay you $27,250 in year 2, $44,098 in year 4 and $49,414 in year 6. If your required return is 8.49%, what is the most you should pay for the investment? (In other words, how much is the project worth today?) 2. If you have $485 today and you think you can earn an interest rate of 6% per year, how many years until you...

4. what is the future value of a $10,000 investment after 5 years with a 8%...

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Sally lends 10,000 to Tim. Tim agrees to pay back the loan over 5 years with...

Sally lends 10,000 to Tim. Tim agrees to pay back the loan over 5 years with monthly payments payable at the end of each month. Sally can reinvest the monthly payments from Tim in a savings account paying interest at 6%, compounded monthly. The yield rate earned on Sallys investment over the five-year period turned out to be 7.45%, compounded semi- annually. What nominal rate of interest, compounded monthly, did Sally charge Tim on the loan?

Suppose you buy a bond that will pay $10,000 principal at the end of 10 years....

Suppose you buy a bond that will pay $10,000 principal at the end of 10 years. No coupon interest payments are made on the bond. (It is a zero coupon bond.) If the yield to maturity of similar zero coupon bonds is 6 percent per year: A. What is the current price of the bond? B. What will be the price of the bond if the market yield to maturity instantaneously increases to 8 percent per year? C. What will...

You make a 5 year investment. The investment returns in each of the 5 years are:...

You make a 5 year investment. The investment returns in each of the 5 years are: 3%, 10%, -15%, 0%, and 25% What is the holding period return of your stock investment? What is the arithmetic mean annual return of the investment? What is geometric mean annual return of the investment? If the order of the returns were reversed (so 25%, 0%, -15%, 10%, 3%), would the ending value of your investment be different?

You are considering an investment that will pay you $3,000 for the next five years. That...

You are considering an investment that will pay you $3,000 for the next five years. That is, there will be five cash flows of $3,000, but the cash flows are paid at the beginning of the year. • Your opportunity cost of capital (r ) is 7.75%  Using the present value formula calculate the present value of each of the cash flows by 1. Discounting cash flows using annual compounding 2. Discounting cash flows using monthly compounding 3. Discounting...

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