Question
In: Finance
Mitchell Investments has offered you an investment opportunity. If you invest $30,000 today you will receive...
Mitchell Investments has offered you an investment
opportunity. If you invest $30,000 today you will receive the
following cash-flows:
*$6,000 each year from years 1 through 5
*$3,000 each year from years 6 through 10
*$2,000 each year from years 11 through 20
If you required a 9% return on your investments, would this be
a good investment opportunity? Show your work and justify your
answer.
Solutions
Expert Solution
The investment is giving +Ve NPV hence it is agood oppurtunity
| Year | Cash Flow | PVF/PVAF @ 9% | PV of Cash Flows |
| 1 to 5 | $ 6,000.00 | 3.8897 | $ 23,337.91 |
| 6 to 10 | $ 3,000.00 | 2.5280 | $ 7,584.02 |
| 11 to 20 | $ 2,000.00 | 2.7109 | $ 5,421.80 |
| PV of Cash Inflows | $ 36,343.73 | ||
| PV of Cash Outflows | $ 30,000.00 | ||
| NPV | $ 6,343.73 |
jeff jeffy answered 1 year agoRelated Solutions
Mitchell Investments has offered you an investment opportunity. If you invest $30,000 today you will receive...
Mitchell Investments has offered you an investment
opportunity. If you invest $30,000 today you will receive the
following cash-flows:
*$6,000 each year from years 1 through 5
*$3,000 each year from years 6 through 10
*$2,000 each year from years 11 through 20
If you required a 9% return on your investments, would this be
a good investment opportunity? Show your work and justify your
answer.
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You are offered the following investment opportunity: • Invest
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