Question
A) An investment offers $14200 per year for 12 years, with the first payment occurring 1 year from now. If the required return is 8
A) An investment offers $14200 per year for 12 years, with the first payment occurring 1 year from now. If the required return is 8 percent, what is the value of the investment?
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B) An investment offers $4300 per year for 18 years, with the first payment occurring 4 years from now. If the required return is 6 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period 0 by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=6 FV=Present value of annuity you found in step 1. And you solve for PV)
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C) Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 5 percent, what is the future value of these cash flows in Year 4? (Hint: Be careful with the number of periods.) If the picture doesn't load, the cash flows shown in the picture are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.
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D) Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 4 percent, what is the future value of these cash flows in Year 5? (Hint: Be careful with the number of periods.) If the picture doesn't load, the cash flows shown in the picture are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.
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