A company has 2 investment opportunities with the following cash flows: &n

A company has 2 investment opportunities with the following cash flows:

Year 1 Year 2 Year 3

Investment A $1,500 $1,250 $1,800

Investment B $1,500 $1,500 $1,500

If a company can earn 5% in other investments, what is the present value of investments A and B?

Investment A = $4,084.50 Investment B = $4,117.20

Investment A = $4,084.50 Investment B = $4,084.50

Investment A = $4,117.20 Investment B = $4,084.50

Investment A = $4,275 Investment B = $3,858.18

Expert Solution

Ans Investment A = $4,117.20 Investment B = $4,084.50

INVESTMENT A
Year	Project Cash Flows (i)	DF@ 5%	DF@ 5% (ii)	PV of Project ( (i) * (ii) )

1	1500	1/((1+5%)^1)	0.952	1,428.57
2	1250	1/((1+5%)^2)	0.907	1,133.79
3	1800	1/((1+5%)^3)	0.864	1,554.91
		PV		4,117.27

INVESTMENT B
Year	Project Cash Flows (i)	DF@ 5%	DF@ 5% (ii)	PV of Project ( (i) * (ii) )

1	1500	1/((1+5%)^1)	0.952	1,428.57
2	1500	1/((1+5%)^2)	0.907	1,360.54
3	1500	1/((1+5%)^3)	0.864	1,295.76
		PV		4,084.50

jeff jeffy answered 1 year ago

CRA Company is considering three investment opportunities with cash flows as described below: Project C: Cash...

CRA Company is considering three investment opportunities with cash flows as described below: Project C: Cash investment now………………………………… $ 16,000 Annual Cash inflow for 5 years……………………… $ 10,000 Cash outflow at the end of 3 years…………………..$ 3,000 Additional cash inflow at the end of 5 years……….. $12,000 Project R: Cash investment now…………………………………. $ 7,000 Cash inflow at the end of 2 years……….…………… $ 18,000 Cash inflow at the end of 7 years……………………. $ 40,000 Project A: Cash investment now………………………………….. $...

A real estate investment has the following expected cash flows: Year Cash Flows 1 $7,000 2...

A real estate investment has the following expected cash flows: Year Cash Flows 1 $7,000 2 17,000 3 22,000 4 22,000 The discount rate is 11 percent. What is the investment’s present value? Round it to two decimal places, i.e., 1234.45.

Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Year Investment...

Mountain Brook Company is considering two investment opportunities whose cash flows are provided below: Year Investment A Investment B 0 $ (15,000) $ (9,000) 1 5,000 5,000 2 5,000 4,000 3 5,000 3,000 4 4,000 1,000 The company's hurdle rate is 12%. What is the present value index of Investment A? (Do not round your PV factors and intermediate calculations.) Multiple Choice 1.01 1.00 0.97 None of these answers...

(Ignore income taxes in this problem.) Monson Company is considering three investment opportunities with cash flows...

(Ignore income taxes in this problem.) Monson Company is considering three investment opportunities with cash flows as described below: Required: Compute the net present value of each project assuming Monson Company uses a 12% discount rate. Which Project should Monson choose and why? Project A: Cash investment now $ 15,000 Cash inflow at the end of 5 years $ 21,000 Cash inflow at the end of 8 years $ 21,000 Project B: Cash investment now $ 11,000 Annual cash outflow...

Determine cash flows, r, and n You are considering an investment that has a payoff of...

Determine cash flows, r, and n You are considering an investment that has a payoff of $4,707.79 in 2 years. If the interest rate is 11.68%, and interest is compounded annually, then what is this investment worth to you today?

A company has the following mutually exclusive investment alternatives. The cash flows are shown below. Year...

A company has the following mutually exclusive investment alternatives. The cash flows are shown below. Year Project A Project B 0 -$1,000 -$1,000 1 600 300 2 600 600 3 600 900 If the cost of capital is 10%, which investment(s) should the company select? Both Project A and Project B Project B with a NPV of $444.78 Project B with a NPV of $276.31 Project A with a NPV of $493.11 Project A with a NPV of $253.64

Seaborn Co. has identified an investment project with the following cash flows.

Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $800 2 1,000 3 1,330 4 1,160 Required: (a) If the discount rate is 10 percent, what is the present value of these cash flows? (Click to select) 3,679.79 3,268.96 3,424.40 4,290.00 3,345.26 (b) What is the present value at 18 percent? (Click to select) 2,746.13 3,308.65 4,290.00 3,635.58 2,803.94 (c) What is the present value at 28 percent? (Click to select) 2,345.12 2,259.53 ...

A real estate investment has the following expected cash flows: Year

A real estate investment has the following expected cash flows: Year Cash Flows 1 $9,000 2 13,000 3 18,000 4 25,000 The discount rate is 12 percent. What is the investment’s present value? Round your answer to 2 decimal places; for example 2345.25.

Q56 The Elvira (Ghana) Limited contemplating three available investment opportunities, the cash flows of which are...

Q56 The Elvira (Ghana) Limited contemplating three available investment opportunities, the cash flows of which are given below Initial Cash flow Investment Year 1 Year 2 Year 3 Year 4 Year 5 GHS GHS GHS GHS GHS GHS Project Adina (100) 40 40 40 40 Project Belcore (120) 10 10 10 10 200 Project Calisto (150) 100 80 In each case the initial investment represents the purchase of plant and machinery, whose realisable value will be 10% of initial cost,...

A real estate investment has the following expected cash flows: Year 0 Year 1 Year 2...

A real estate investment has the following expected cash flows: Year 0 Year 1 Year 2 Year 3 Year 4 Cashflow 10,000 25,000 50,000 35,000 The discount rate is 9%. What is the investment’s value 4 years from now? Select one: a. $ 132,152 b. $103,700 c. $ 113,345 d. $120,000 e. $130,757

Question