⦁ The present value of $1,000 received at the end of year 1, $1,200 received at...

⦁ The present value of $1,000 received at the end of year 1, $1,200 received at the end of year 2, and $1,300 received at the end of year 3, assuming an opportunity cost of 7 percent, is

Solutions

Expert Solution

Solution :

Assuming an opportunity cost of 7 percent

The present value of $ 1,000 received at the end of year 1 = $ 934.5794

= $ 934.58 ( when rounded off to two decimal places )

The present value of $ 1,200 received at the end of year 2 = 1,048.1265

= $ 1,048.13 ( when rounded off to two decimal places )

The present value of $ 1,300 received at the end of year 3 = 1,061.1872

= $ 1,061.19 ( when rounded off to two decimal places )

The total of the presnet values of all the receipts from Year 1 to Year 3 = $ 3,043.8932

= $ 3,043.89 ( when rounded off to two decimal places )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

1. What is the present value of $1,000 at 8% to be received in each of...

1. What is the present value of $1,000 at 8% to be received in each of the next 5 years? 2. Calculate the return on investment, given the following: Avg. invested assets = $2,000,000 Annual Depreciation = $35,000 Net Cash Flows = $350,000 3. Calculate the return on investment for a company with a net income of a product of $55,000, net cash flows of 35,000 and avg invested assets on that product was 645,000 4. true or false: Future...

What is the present value of an annuity of SAR800 received at the end of each...

What is the present value of an annuity of SAR800 received at the end of each year for 12 years? Assume a discount rate of 10%. The first payment will be received one year from today (round your answer to nearest SAR1).

4) Determine the present value of $35,000 to be received at the end of each of...

4) Determine the present value of $35,000 to be received at the end of each of five years, using an interest rate of 5%, compounded annually, as follows: a) By successive computations, using the Present Value of $1 table below. You must show your work. b) By a single computation using the Present Value of an Annuity of $1 table below. You must show your work. Note: The two answers will not come out exactly the same, but should be...

a) What is the present value of $1,200 per year, at a discount rate of 8...

a) What is the present value of $1,200 per year, at a discount rate of 8 percent, if the first payment is received 9 years from now and the last payment is received 28 years from now? b) ABC Co. wants to sell you an annuity that will pay you $500 per quarter for 25 years. You want to earn a minimum rate of return of 5.1 percent. What is the most you are willing to pay today to buy...

Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year

Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year, assuming a discount rate of 10%.

What is the present value of $1,200 per year, at a discount rate of 8 percent,...

What is the present value of $1,200 per year, at a discount rate of 8 percent, if the first payment is received 9 years from now and the last payment is received 28 years from now?

1.) You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in...

1.) You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in year 4 in your savings account. You think that you can earn 6% per year. How much will you have in your account in Year 6? 2.) Bank X promises to pay you $5,200 per year for 8 years, whereas Bank Y offers to pay you $7,300 per year for 5 years. a) Which of these cash flow streams has the higher present value...

You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in year...

You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in year 4 in your savings account. You think that you can earn 6% per year. How much will you have in your account in Year 6? Yr0 Yr1 Yr2 Yr3 Yr4 Yr 5 Yr 6 $1,000 $1,200 $2,000 ? Bank X promises to pay you $5,200 per year for 8 years, whereas Bank Y offers to pay you $7,300 per year for 5 years....

What’s the present value of a perpetuity that pays $1,000 per year beginning 1 year from...

What’s the present value of a perpetuity that pays $1,000 per year beginning 1 year from now, if the appropriate interest rate is 5%? What would the value be if payments on the annuity began immediately? ($20,000, $21,000. Hint: Just add the $1,000 to be received immediately to the value of the annuity.)

Calculate the present value of $1 million paid at the end of every year in perpetuity,...

Calculate the present value of $1 million paid at the end of every year in perpetuity, assuming a rate of return of 10% and a constant growth rate of 6%.

Subjects