Question
An investment will return $1,000 in cash in each of years 7 and 8 and $500 in year 2. You expect to earn 10%. Is
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An investment will return $1,000 in cash in each of years 7 and 8 and $500 in year 2. You expect to earn 10%. Is the present value (PV) for this investment properly calculated by the expression: $1,000 (PV/A, 10%, 2) (PV/FV, 10%, 6)?
For the above investment, is the PV properly calculated by:
$1,000 (PV/A, 10%, 2) (1/(1.1)6 ) + $500(PV, 10%, 2) ?
For the above investment, is the PV also properly calculated by:
$1,000/(1.1)8+ $1,000/(1.1)7 + $500/(1.1) 2 ?
If the $500 cash flow was moved occurred in year 1 instead of year 2 would you expect the PV to decrease?
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Foundations Of Financial Management
Authors: Stanley B Block, Geoffrey A Hirt
12th Edition
0073295817, 9780073295817
