1. Complete the calculations for the time value of money problem below. Type the answer to...

1. Complete the calculations for the time value of money problem below. Type the answer to your calculations in the text box. Then provide a short sentence to explain the appropriate investment decision and why.

Question: Veda Financial offers an investment opportunity that pays $65 p.a. over a 25-year period, but the first payment commences 6 years from today. The security currently trades on the market at a price of $525. Your required rate of return for investing in these types of securities is 8% p.a.

Tasks:

Determine the fair value of this investment to you.
Discuss if you would (or would not) investment in this security, and why.

(2 marks, discussion approx. 15 – 25 words)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

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