Astrid makes an investment with a zero net present value. She pays $750 today, and receives...
Astrid makes an investment with a zero net present value. She pays $750 today, and receives $475 one year from today, $225 two years from today, and _____ three years from today. There are no other cash flows, and her effective annual interest rate is 11%.
Homework Answers
| Project | |||
| Discount rate | 0.11 | ||
| Year | 0 | 1 | 2 |
| Cash flow stream | -750 | 475 | 225 |
| Discounting factor | 1 | 1.11 | 1.2321 |
| Discounted cash flows project | -750 | 427.9279 | 182.615 |
| NPV = Sum of discounted cash flows | |||
| NPV Project = | -139.46 | ||
| Where | |||
| Discounting factor = | (1 + discount rate)^(Corresponding period in years) | ||
| Discounted Cashflow= | Cash flow stream/discounting factor | ||
Year 3 CF = NPV*(1+rate)^3
=139.46*(1+0.11)^3
=
| 190.73 |
Add Answer to:
Astrid makes an investment with a zero net present value. She
pays $750 today, and receives...
The interest rate that makes the net present value of the investment equal to zero is...
The interest rate that makes the net present value of the investment equal to zero is the internal rate of return. True False
6. Mike receives cash flows of $100 today, $200 in one year, and $100 in two...
6. Mike receives cash flows of $100 today, $200 in one year, and $100 in two years. The present value of these cash flows is $385.49 at an annual effective rate of interest i (a) Draw a diagram labeling time, cash flows, and present value (b) Write an equation of value for this situation in terms of c) Solve your equation for and then calculate i
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the...
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the CD? A) $109,270. B) $119,410. C) $309,090. D) $142,576. 12) Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal? A) $43.131. B) $35.000. C) $37,205. D) $35,069. 13) At the end of...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on her investment, what should she pay for this investment today? two years from now. If she can earn 6.5 percent, 11. Present value: Your brother has asked you for a loan and has promised to pay you$7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your brother...
please help, show work. 5.) Jennifer has been given money for her birthday. She puts her...
please help, show work. 5.) Jennifer has been given money for her birthday. She puts her money in a savings account offers an annual interest rate of 4.50%, compounded monthly. What is the effective annual rate (EAR) on the saving account? 6.) An individual invests $10,000 today in an investment that is expected to be worth $20,000 in 6 years. What annualized rate of return is the investor expecting to receive on the investment? 7.) A college graduate just bought...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate of return (IRR) method. Methods That Use Present Values Of the two capital investment evaluation methods, a defining characteristic NPV and IRR is that they consider the time value of money. This means that money tomorrow is worth less than money today....
Exercise n3: present value of an annuity You are given three investment alternatives to analyze. The...
Exercise n3: present value of an annuity You are given three investment alternatives to analyze. The cas from these three investments are as follows YEAR INVESTA 1 10000 2 10000 3 10000 4 10000 5 10000 INVESTB INVESTC 1000 10000 5000 10000 10000 10000 10000 10000 Assuming a 5% interest rate (discount rate), find the present va .t=0) of each investment xercise n°4 : Effective annual rate ou want to borrow $1,000 from a friend for one year, and you...
What is the present value of an annuity that pays $352 at the beginning of each...
What is the present value of an annuity that pays $352 at the beginning of each year for 47 years if the annuity earns 12% annually? An account pays 2% annual interest compounded monthly. What is the effective interest rate on this account? If you deposit some money into a bank account today, to the nearest year, how long will it take to triple your deposit if it earns 11% annually? What is the present value of an annuity that...
Present value of an ordinary annuity: An investment opportunity requires a payment of $750 for 12...
Present value of an ordinary annuity: An investment opportunity requires a payment of $750 for 12 years, starting a year from today. If your required rate of return is 8 percent, what is the value of the investment to you today?
12. Tiffany opened a saving account today and she immediately puts $7,000 into it. She plans...
12. Tiffany opened a saving account today and she immediately puts $7,000 into it. She plans to contribute another $13,000 one year from now, and $15,000 two years from now. The saving account pays an 8% annual interest rate. If she makes no other deposits or withdrawals, how much will she have in the account 10 years from today?
The interest rate that makes the net present value of the investment equal to zero is the internal rate of return. True False
6. Mike receives cash flows of $100 today, $200 in one year, and $100 in two years. The present value of these cash flows is $385.49 at an annual effective rate of interest i (a) Draw a diagram labeling time, cash flows, and present value (b) Write an equation of value for this situation in terms of c) Solve your equation for and then calculate i
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the CD? A) $109,270. B) $119,410. C) $309,090. D) $142,576. 12) Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal? A) $43.131. B) $35.000. C) $37,205. D) $35,069. 13) At the end of...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on her investment, what should she pay for this investment today? two years from now. If she can earn 6.5 percent, 11. Present value: Your brother has asked you for a loan and has promised to pay you$7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your brother...
Exercise n3: present value of an annuity You are given three investment alternatives to analyze. The cas from these three investments are as follows YEAR INVESTA 1 10000 2 10000 3 10000 4 10000 5 10000 INVESTB INVESTC 1000 10000 5000 10000 10000 10000 10000 10000 Assuming a 5% interest rate (discount rate), find the present va .t=0) of each investment xercise n°4 : Effective annual rate ou want to borrow $1,000 from a friend for one year, and you...
Most questions answered within 3 hours.
-
Which of the following statements accurately defines
neuroglial cell?
A.
Central area of the cell containing...
asked 29 seconds from now -
7.4) A 860 MW power plant uses steam at 600 K as its input heat
and...
asked 1 minute ago -
The joining of two
amino acids via a peptide bond (the process of protein synthesis)
has...
asked 10 minutes ago -
9. Approximately 75% of statistics students do their homework on
time for it to be collected...
asked 16 minutes ago -
Analyze the value chain analysis of your favorite company and
describe the strengths and how they...
asked 16 minutes ago -
Which of the following is a tolerogenic cytokine?
A)
TGF-B
B)
IL-1
C) IL-10
D)Both TGF-B...
asked 40 minutes ago -
1. A decade ago, the idea that medical procedures might move
offshore was unthinkable. Today it...
asked 35 minutes ago -
what kind of constraints have cost -benefit tradeoff problems?
less than or equal
greater or equal...
asked 42 minutes ago -
What is a foreign key and a primary key and how do they relate
to each...
asked 49 minutes ago -
For the following reaction at a certain temperature H₂(g) +
F₂(g) ⇌ 2HF(g) the equilibrium concentrations...
asked 40 minutes ago -
You need $77,000 in 12 years.
If you can earn .44 percent per month, how much...
asked 49 minutes ago -
Sufficient dwelling coverage. Mullai and Sri have owned their
home for 17 years. When they purchased...
asked 55 minutes ago