Question
Marcus Fenix is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $12,500; year
Marcus Fenix is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $12,500; year 2, $10,000; year 3, $7,500; year 4, $5,000; year 5, $2,500; year 6, $0; and year 7, $15,000. Marcus believes that he should earn an annual rate of 8 percent on this investment. How much should he pay for this investment?
SIMILAR QUESTION + ANSWER
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $12,500; year 2, $10,000; year 3, $7,500; year 4, $5,000; year 5, $2,500; year 6, $0; and year 7, $12,500. Walt believes that he should earn an annual rate of 8 percent on this investment. How much should he pay for this investment?
CF0 = 0; C01 = 12500; F01 = 1; C02 = 10000; F02 = 1; C03 = 7500; F03 = 1; C04 = 5000; F04 = 1; C05 = 2500; F05 = 1; C06 = 0; F06 = 1; C07 = 12500; F07 = 1; CPT NPV(I = 8%) = $38,771.44
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Personal Finance
Authors: Jeff Madura
7th Edition
0134989961, 978-0134989969
