Question

Investment X offers to pay you $4,700 per year for eight years


Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 

image.png


 Complete the following analysis. Do not hard code values in your calculations. All answers should be positive. 

Value of X at 5% _______ 

Value of Y at 5% _______ 

Value of X at 15% _______ 

Value of Y at 15% _______ 

1 0
Add a comment Improve this question Transcribed image text
Answer #1
Value of Xat 5% $30,377.10
Value of Y at 5% $29,007.49
Value of X at 15% $21,090.41
Value of Y at 15% $22,459.44

Workings

AutoSave Of Book1- Excel Sign in Comments Share O Tell me what you want to do File Home Formulas Review View Help Insert Draw

Add a comment
Answer #3

NPV is given by::

Σ Rt/(1 i)ttvaries from 1 to n NPV where Rt Cash flow netted (Inflow - Outflow) during the period t i Discount rate t numbe

A B C D E F G H K L N 1 2 3 Cashflows can be written as: 4 Year 5 1 3 4. 5 6 7 8 Cashflow 4700 4700 Payment for X 4700 4700 6

We will be using excel formula of NPV (discount rate, cashflows)

X fxNPV(D12,G6: N6) SUMIF А В C D E F Н K L M N 1 2 3 Cashflows can be written as: 4 5 Year 1 2 3 4 5 6 7 8 Cashflow 6 Paymen

X fx =NPV(D12,G10: K10) SUMIF A В E F G Н K L м 1 2 3 Cashflows can be written as: 5 Year 2 3 4 5 6 7 8 Cashflow 6 Payment fo

A В C E F J K L M N 1 2 3 Cashflows can be written as: 5 Year 1 2 3 5 6 7 8 4700 Cashflow 6 Payment for X 4700 4700 4700 4700

X V fx NPV(D13,G10:K10) SUMIF D. A В C E G Н К L М N 1 2 3 Cashflows can be written as: 4 5 Year 1 2 3 4 5 6 7 8 Cashflow 6 P

SUMMARY

Payment for X 4700 Number of Years Payment for X 6700 Number of Years 5 Discount Rate 5% Discount Rate 15% Value of X at 5% $

Add a comment
Answer #2

DEF $4,700 Payment for X Number of years for X $6,700 Payment for Y Number of years for Y 5% Discount rate Discount rate 15%4700 Payment for X Number of years for X 6700 Payment for Y Number of years for Y Discount rate Discount rate 0.05 0.15 Value

Add a comment
Know the answer?
Add Answer to:
Investment X offers to pay you $4,700 per year for eight years
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
  • Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers...

    Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,800 per year for five years. (Use a Financial calculator to arrive at the answers. Round "PV Factor" to 3 decimal places. Round the final answers to 2 decimal places.) Calculate the present value for Investment X and Y if the discount rate is 5%. Calculate the present value for Investment X and Y if the discount rate is 15%. 

  • Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year...

    Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to pay you $6,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? Please do not use excel. Please type it.

  • Investment X offers to pay you $3,700 per year for nine years

    PV Multiple CFs. Investment X offers to pay you $3,700 per year for nine years, whereas Investment Y offers to pay you $5,500 per year for five years. a) Which of these cash flow streams has the higher present value if the discount rate is 6 percent? b) If the discount rate is 22 percent?

  • 1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per...

    1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to pay you $6,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 2. Future Value and Multiple Cash Flows [LO1] Fuente, Inc., has identified an investment project with the following cash flows. If the...

  • Investment X offers to pay you $3,902 per year for 9 years, whereas Investment Y offers...

    Investment X offers to pay you $3,902 per year for 9 years, whereas Investment Y offers to pay you $5,199 per year for 6 years. What is the dollar difference (higher minus lower) in the present values of these two cash flow streams if the discount rate is 7.32 percent? Answer to two decimals.

  • Calculating Value and Multiple Cash Flows: Investment X offers to pay you $4850 per year for...

    Calculating Value and Multiple Cash Flows: Investment X offers to pay you $4850 per year for nine years, whereas Investment Y offers to pay you $6775 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5%? If the discount rate is 21%? Calculating Annuity Present Value: An investment offers $5500 per year for 15 years, with the first payment occurring one year from now. If the required return...

  • Investment X offers to pay you $5,500 per year for nine years,whereas Investment Y offers...

    Investment X offers to pay you $5,500 per year for nine years, whereas Investment Y offers to pay you $8,000 per year for five years. a. Calculate the present value for Investments X and Y if the discount rate is 5 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the present value for Investments X and Y if the discount rate is 15 percent. (Do not round intermediate calculations and round your...

  • Investment X offers to pay you $4,800 per year for nine years, whereas Investment Y offers...

    Investment X offers to pay you $4,800 per year for nine years, whereas Investment Y offers to pay you $6,900 per year for five years. Calculate the present value for Investments X and Y if the discount rate is 6 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present value Investment X Investment Y Calculate the present value for Investments X and Y if the discount rate is 16 percent. (Do not...

  • Investment X offers to pay you $4,900 per year for nine years, whereas Investment Y offers...

    Investment X offers to pay you $4,900 per year for nine years, whereas Investment Y offers to pay you $7,600 per year for five years.    a. Calculate the present value for Investments X and Y if the discount rate is 4 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the present value for Investments X and Y if the discount rate is 14 percent. (Do not round intermediate calculations...

  • Present Value and Multiple Cash Flows[LO1]

    Present Value and Multiple Cash Flows[LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to pay you $6,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent?

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