There are three options of investment: If you invest 1000 now, you will receive 375 each...
There are three options of investment: If you invest 1000 now, you will receive 375 each at the end of next three years. If you invest 1000 now, you will receive 1080 at the end of 1st year. If you invest 1000 now, you will receive 1100 at the end of 2nd year. Risk-free interest rate is assumed to be 5%.
- Would you invest any of them? Why?
- Which one would you pick? Why?
Homework Answers
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There are three options of investment: If you invest 1000 now,
you will receive 375 each...
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You are considering two investment options. In option A, you have to invest $7000 now and $500 three years from now. In option B, you have to invest $3800 now, $1600 a year from now, and $1000 three years from now. In both options, you will receive four annual payments of $2600 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You are considering two investment options. In option A, you have to invest $6000 now and...
You are considering two
investment options. In option A, you have to invest $6000 now and
$1 000
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You are considering two investment options. In option A, you have to invest $4,500 now and...
You are considering two investment options. In option A, you have to invest $4,500 now and $1,200 three years from now. In option B, you have to invest $3,700 now, $1,700 a year from now, and $1,100 three years from now. In both options, you will receive four annual payments of $2,100 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You are considering two investment options. In option A, you have to invest RM5000 now and...
You are considering two investment options. In option A, you have to invest RM5000 now and RM1000 three years from now, In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM3000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You are considering two investment options. In option A, you have to invest RM6000 now and...
You are considering two investment options. In option A, you have to invest RM6000 now and RM1000 three years from now, In option B, you have to invest RM1500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM3000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You are considering two investment options. In option A, you have to invest RM4000 now and...
You are considering two investment options. In option A, you have to invest RM4000 now and RM1000 three years from now, In option B, you have to invest RM1500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM4000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
8. Consider the following two investment options: (1) Invest $1,000 and receive $110 at the end...
8. Consider the following two investment options: (1) Invest $1,000 and receive $110 at the end of each month for the next 10 months. (2) Invest $1,200 and receive $130 at the end of each month for the next 10 months. If this were your money, and you want to earn at least 12% interest on your money, which investment would you make, if any? Determine which alternative should be selected, based on Net Present Worth (NPW). Show all of...
You are considering two investment options. In option A. you have to invest $6,000 now and...
You are considering two investment options. In option A. you have to invest $6,000 now and $700 three years from now. In option B. you have to invest $3,000 now, $1,300 a year from now, and $800 three years from now. In both options, you will receive four annual payments of $1,900 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You have the opportunity to invest $5,000 today and receive risk free payments of $4,000 at...
You have the opportunity to invest $5,000 today and receive risk free payments of $4,000 at the end of each of the next three years. Assume that you can borrow and lend at a risk free rate of 12% per year, compounded annually. The internal rate of return on this investment opportunity is 60.74%. True or False (Circle one). If you take this project, after you receive the final payment of $4,000 at time t=3 you will have earned an...
If you invest $1,000 today, you will receive $400 in one year from now and $750...
If you invest $1,000 today, you will receive $400 in one year from now and $750 in two years from now. If your require a 12% return on investments of this risk, should you take the investment?
You are considering two
investment options. In option A, you have to invest $6000 now and
$1 000
You are considering two investment options. In option A, you have to invest $6,000 now and S1,000 three years from now. In option B, you have to invest $3,400 now, $1,800 a year from now, and $1,100 three years from now. In both options, you will receive four annual payments of $2,300 each. (You will get the first payment a year from...
You are considering two investment options. In option A, you have to invest RM5000 now and RM1000 three years from now, In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM3000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
You are considering two investment options. In option A, you have to invest RM4000 now and RM1000 three years from now, In option B, you have to invest RM1500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM4000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
8. Consider the following two investment options: (1) Invest $1,000 and receive $110 at the end of each month for the next 10 months. (2) Invest $1,200 and receive $130 at the end of each month for the next 10 months. If this were your money, and you want to earn at least 12% interest on your money, which investment would you make, if any? Determine which alternative should be selected, based on Net Present Worth (NPW). Show all of...
You are considering two investment options. In option A. you have to invest $6,000 now and $700 three years from now. In option B. you have to invest $3,000 now, $1,300 a year from now, and $800 three years from now. In both options, you will receive four annual payments of $1,900 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the...
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