Question
In: Finance
Consider an investment that pays $39.66 in year 1, and then stabilizes and pays $4.73 every...
Consider an investment that pays $39.66 in year 1, and then stabilizes and pays $4.73 every year forever after that (the first cash flow is in year 2) This firm does not intend to grow and has an interest rate (required rate of return) of 7%. What is the present value of this investment opportunity? Give your answer to two decimals.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
What is the present value (PV) of an investment that pays $90,000 every year for four...
What is the present value (PV) of an investment that pays
$90,000 every year for four years if the interest rate is 9% APR,
compounded quarterly?
What is the present value (PV) of an investment that pays $90,000 every year for four...
What is the present value (PV) of an investment that pays
$90,000 every year for four years if the interest rate is 9% APR,
compounded quarterly?
What is the present value of an investment that pays $200 every other year forever if...
What is the present value of an investment that pays
$200 every other year forever if the first cash flow occurs in two
years? What is the value when the first cash flow occurs in one
year? The opportunity cost of capital is 12% per year.
An investment pays $15,000 every other year forever with the first payment one year from today....
An investment pays $15,000 every other year forever
with the first payment one year from today.
a.
What is the value today if the discount rate is 8 percent
compounded daily? (Use 365 days a year. Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
b.
What is the value today if the first payment occurs four years
from today? (Use 365 days a year. Do not round intermediate
calculations and round your answer...
a)An investment pays $10,000 after 1 year and it pays another $8,000 after another 1 year....
a)An investment pays $10,000 after 1 year and it pays another
$8,000 after another 1 year. The interest rate is 5%. What is the
present value of this investment?
b)A bond's face value is the amount the issuer provides to the
bondholder, once maturity is reached. A bond's face value is
$100,000 and it mature after five years. If the interest rate is
1.5%, how much would you pay (at most) to purchase this bond?
An annuity pays $1 at the end every odd year and $2 at the end of...
An annuity pays $1 at the end every odd year and $2 at the end
of each even year (not counting year 0) for 10 years. If the
effective annual rate is 6%, what is the present value of the
annuity?
Show all your work leading to your final answer
1. Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter,...
1. Frank Rizzo is considering two investment options
with seven-year lives. Option one pays $250 every quarter, the
other pays $500 semi-annually. The option with the better value
would be:
A. $250 every quarter.
B. Both options are equally attractive.
C. $500 semi-annually.
2. Darius Rucker is leaving Theta Tech after several years.
During his time at Theta he accumulated a deferred payroll
benefit. He must choose between a lump-sum distribution
or annual payments over the next 10 years, with his first...
Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for...
Consider an investment that costs $100,000 and has a cash inflow
of $25,000 every year for 5 years. The required return is 9%, and
the required payback is 4 years.
What is the payback period?
What is the discounted payback period?
What is the NPV?
What is the AAR?
What is the IRR?
What is the MIRR?
What is the PI?
Should we accept the project?
What decision rule should be the primary decision method?
When is the IRR rule...
Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for...
Consider an investment that costs $100,000 and has a cash inflow
of $25,000 every year for 5 years. The required return is 9%. What
is the net present value of this investment?
A) $ -2,758.72
B) $ -857.65
C) $1217.70
D) $10,525
E) $25,000
Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for...
Consider an investment that costs $100,000 and has a cash
inflow of $25,000 every year for 5 years. The required return is 9%
and required payback is 4 years.
• What is the payback period?
• What is the NPV?
• What is the IRR?
• Should we accept the project?
What decision rule should be the primary decision
method?
When is the IRR rule unreliable?
•
•
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