ZuoTi.Pro
Question

Annual cash flows from two competing investment opportunities are given. Each investment opportunity will require the same initial investment. LOADING...​(Click the icon to view the competing investment​ opportunities.) LOADING...​(Click the icon to view the Present Value of​ $1 table.) LOADING...​(Click the icon to view the Present Value of Annuity of​ $1 table.) Requirement 1. Assuming a 14​% interest​ rate, which investment opportunity would you​ choose? Begin by computing the present value of each investment opportunity. ​(Assume that the annual cash flows occur at the end of each year. If using present value​ tables, use factor amounts rounded to three decimal​ places, X.XXX. Round intermediary computations and your final answer to the nearest whole​ dollar.) The present value of investment opportunity A is $ and the present value of investment opportunity B is $ . Investment opportunity ▼ B A should be chosen because the present value of cash flows is ▼ higher lower than the present value of investment opportunity ▼ A B

Data Table Investment Year A 1 8,000 $ 13,000 2 10,000 13,000 13,000 21,000 3 39,000 39,000 $ Print Done E

X ii Present Value of $1 Present Value of $1 8% Periods 10% 4% 5% 6% 7% 12% 14% 16% 0.962 0.943 0.909 0.877 0.935 0.873 1 0.9

Present Value of Annuity of $1 Present Value of Ordinary Annuity of $1 7% Periods 4% 5% 6% 8% 10% 12% 14% 16% 0.943 0.909 1.7

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Investment A: Annual Cash Flows: $ 8000, $ 10000, $ 21000, Discount Rate = 14 %

Present Worth = 8000 / (1.14) + 10000 / (1.14)^(2) + 21000 / (1.14)^(3) = $ 28886.62

Investment B: Annual Cash Flows: $ 13000, Discount Rate = 14 %

Present Worth = 13000 x (1/0.14) x [1-{1/(1.14)^(3)}] = $ 30181.22

0 0
Add a comment
Know the answer?
Add Answer to:
Annual cash flows from two competing investment opportunities are given. Each investment opportunity will require the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • annual cash flows Annual cash flows from two competing investment opportunities are given. Each investment opportunity...

    annual cash flows Annual cash flows from two competing investment opportunities are given. Each investment opportunity will require the same initial investment (Click the icon to view the competing investment opportunities) (Click the icon to view the Present Value of $1 table) Click the icon to view the Present Value of Annuity of S1 table.) Requirement 1. Assuming a 14% interest rate, which investment opportunity would you choose? Begin by computing the present value of each investment opportunity (Assume that...

  • Calculate the present value of the following​ amounts: 1. ​$14 comma 00014,000 at the end of...

    Calculate the present value of the following​ amounts: 1. ​$14 comma 00014,000 at the end of tenten years at 88​% 2. ​$14 comma 00014,000 a year at the end of the next tenten years at 88​% ​(If using present value​ tables, use factor amounts rounded to three decimal​ places, X.XXX. Round your final answers to the nearest whole​ dollar.) LOADING... ​(Click the icon to view Present Value of​ $1 table.) LOADING... ​(Click the icon to view Present Value of Ordinary...

  • You have received a settlement offer from an automobile manufacturer due to mechanical problems with your...

    You have received a settlement offer from an automobile manufacturer due to mechanical problems with your automobile. The manufacturer will pay you $ 19 comma 000 in one lump sum ten years from now. You can earn 8​% on your investments. The present value of the​ manufacturer's settlement offer is closest to ​(If using present value​ tables, use factor amounts rounded to three decimal​ places, X.XXX. Round your final answer to the nearest whole​ dollar.) LOADING...​(Click the icon to view...

  • present value Calculate the present value of the following amounts: 1. $5,000 at the end of...

    present value Calculate the present value of the following amounts: 1. $5,000 at the end of five years at 6% 2. $5,000 a year at the end of the next five years at 6% (lf using present value tables, use factor amounts rounded to three decimal places, X.XX. Round your final answers to the nearest whole dollar) (Click the icon to view Present Value of $1 table) Click the icon to view Present Value of Ordinary Annuity of 51 table.)...

  • Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909...

    Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 0.925 0.890 0.857 0.826 0.797 0.769 3 0.889 0.840 0.794 0.751 0.712 0.675 4 0.855 0.792 0.735 0.683 0.636 0.592 5 0.822 0.747 0.681 0.621 0.567 0.519 6 0.790 0.705 0.630 0.564 0.507 0.456 7 0.760 0.665 0.583 0.513 0.452 0.400 8 0.731 0.627 0.540 0.467 0.404 0.351 9 0.703 0.592 0.500 0.424 0.361 0.308 10 0.676 0.558 0.463 0.386 0.322...

  • Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require...

    Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Compute the present value of the cash inflows for each investment using a 7% discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE NEAREST CENT) Year Investment X Investment Y 1 $2,500 4,000 2 3,000 3,500 3 3,500 3,000 4,000 2,500 Total $13,000 $13,000 4 1. (Total: 6 marks; 3 marks for X and Y each)

  • Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require...

    Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Compute the present value of the cash inflows for each investment using a 7% discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE NEAREST CENT) Year Investment X Investment Y 1 $2,500 4,000 2 3,000 3,500 3 3,500 3,000 4 4,000 2,500 Total $13,000 $13,000 (Total: 6 marks; 3 marks for X and Y each)

  • Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require...

    Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Compute the present value of the cash inflows for each investment using a 9% discount rate. (PLEASE ROUND EACH DISCOUNTED CASH FLOW TO THE NEAREST CENT) Year Investment X Investment Y 1 $2,500 4,000 2 3,000 3,500 3 3,500 3,000 4 4,000 2,500 Total $13,000 $13,000 (Total: 6 marks; 3 marks for X and Y each)

  • Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require...

    Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment. Year 1 Year 2 Year 3 Year 4 Investment X Investment y $ 3,000 $ 6,000 4,000 5,000 5,000 4.000 6,000 3,000 Total $ 18,000 $18,000 Click here to view Exhibit 11B-1, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment using a 10% discount rate. (Round discount factor(s)...

  • Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909...

    Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 0.925 0.890 0.857 0.826 0.797 0.769 3 0.889 0.840 0.794 0.751 0.712 0.675 4 0.855 0.792 0.735 0.683 0.636 0.592 5 0.822 0.747 0.681 0.621 0.567 0.519 6 0.790 0.705 0.630 0.564 0.507 0.456 7 0.760 0.665 0.583 0.513 0.452 0.400 8 0.731 0.627 0.540 0.467 0.404 0.351 9 0.703 0.592 0.500 0.424 0.361 0.308 10 0.676 0.558 0.463 0.386 0.322...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT