Question
Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,400 per year for 5 years.
| Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,400 per year for 5 years. |
| Requirement 1: |
| (a) | If the discount rate is 7 percent, what is the present value of these cash flows? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
| Present value | |
| Investment X | $ |
| Investment Y | $ |
| (b) | Which of these cash flow streams has the higher present value at 7 percent? |
| (Click to select)Investment XInvestment Y |
| Requirement 2: |
| (a) | If the discount rate is 23 percent, what is the present value of these cash flows? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
| Present value | |
| Investment X | $ |
| Investment Y | $ |
| (b) | Which of these cash flow streams has the higher present value at 23 percent? |
| (Click to select)Investment XInvestment Y |
References
eBook & Resources
WorksheetDifficulty: BasicLearning Objective: 05-01 Determine the future and present value of investments with multiple cash flows.
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Handbook Of Modeling High Frequency Data In Finance
Authors: Frederi G. Viens, Maria Cristina Mariani, Ionut Florescu
1st Edition
0470876883, 978-0470876886
