Question

Question 9 9. At an annual interest rate of 7%, the present value of $10000 received in seven years is closest to: A) $3565 B
J PULLS Question 12 5 pts 12. A company is considering an opportunity that requires an investment of $1.500.000 today and wil
0 0
Add a comment Improve this question Transcribed image text
Answer #1
9) Present Value = Future value/ ((1+r)^t)
where r is the interest rate that is 7% and t is the time period in years that is 7.
Future value 10000
Present Value 10000/((1.07)^7)
Present Value 6227.497
The present value is closest to
B) $6227.
12) Present Value = Future value/ ((1+r)^t)
where r is the interest rate that is 15% and t is the time period in years.
Net present value (NPV) = initial investment + sum of present values of future cash flows.
Year 0 1 2 3
cash flow -1500000 350000 450000 630000
present value 304347.8 340264.7 414235.2
NPV -441152
The NPV is -$441152.
The company should not invest in this opportunity since the NPV is negative.
D.
Add a comment
Know the answer?
Add Answer to:
Question 9 9. At an annual interest rate of 7%, the present value of $10000 received...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

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
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