Question
Investment X offers to pay you $7,700 per year for 9 years, whereas Investment Y offers to pay you $10,600 per year for 5 years.
| Investment X offers to pay you $7,700 per year for 9 years, whereas Investment Y offers to pay you $10,600 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 YInvestment X |
| Requirement 2: |
| (a) | If the discount rate is 21 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 21 percent? |
| (Click to select)Investment YInvestment X |
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Applied Conic Finance
Authors: Dilip Madan, Wim Schoutens
1st Edition
1107151694, 978-1107151697
