Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

11. In present value calculations, what is the term given to the rate of return embedded in the calculation? A. LIBOR Prime rate C Discount

image text in transcribed
image text in transcribed
11. In present value calculations, what is the term given to the rate of return embedded in the calculation? A. LIBOR Prime rate C Discount Rate D. Compound interest Rate 12. Assume you invest $700,000 in an office building that you expect to be able to sell in one year for $800,000. Assuming a 7% discount rate, what is the Net Present Value (NPV) of the building? A $55,662.33 B. $48,665,12 C. $47,334.28 D. $47,663.55 13. If you invested $1,000 (Year 0), then added S 1,000 per year for 20 years at a 5% interest rate. how much money would you have at the end of Year 20? A. $35,719.25 B. $45,821.32 C. $48.300.00 D. $51.322.44 14. Congratulations you have won the lottery! However, before you get the money you must work through a PV/FV calculation. You have two options. One, you can take a lump sum payment of 50Million or, two, opt for an annual payment of $1 Million for 30 years. Assuming a 5% rate of return which of the two choices will yield the greater NPV? A LumSPayment because the lump sum payment is greater than the Npv of the payment B. c. D. stream Annuity because the NPV is greater than $50Millon but less than $60Million Annuity because the NPV is greater than S60 Million but less than S7Million Annuity because the NPV is greater than $70Milion 15. Assume the following cash flows; Year 1-$100,000 Year 2-$150,000 Year 3-$200,000 Assuming a discount rate of 9%, what is the NPV of this cash stream? A. $372,431.81 B. $323,482.11 C. $402,112.90 D. $327.431.81

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Oxford Handbook Of IPOs

Authors: Douglas Cumming, Sofia Johan

1st Edition

0190614579, 978-0190614577

More Books

Students also viewed these Finance questions

Question

What is meant by the period of a pendulum?

Answered: 1 week ago

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago

Question

c. What were you expected to do when you grew up?

Answered: 1 week ago