Question
Investment X offers to pay you $7,300 per year for 9 years, whereas Investment Y offers to pay you $9,800 per year for 5 years.
| Investment X offers to pay you $7,300 per year for 9 years, whereas Investment Y offers to pay you $9,800 per year for 5 years. |
| Requirement 1: |
| (a) | If the discount rate is 5 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 5 percent? |
| (Click to select)Investment YInvestment X |
| 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? |
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Risk Sharing Finance
Authors: Bakkali Mirakhor, Saad Abbas
1st Edition
3110590468, 978-3110590463
