Question
Part A. ( 7.5 points ) Suppose you are presented with the following investment opportunity: you will invest $150 000 now, and get $20 000
Part A. (7.5 points) Suppose you are presented with the following investment opportunity: you will invest $150 000 now, and get $20 000 at the end of the first year, $10 000 at the end of the third year, $70 000 at the end of the fifth year, $15 000 at the end of the sixth year, $20 000 at the end of the eighth year, $40 000 at the end of the ninth year, and $50 000 at the end of the tenth year. The interest rate is 6%. Calculate the net present value for the investment option described above using the NPV function of Excel. Should you invest in this opportunity? Please provide your answer in the sheet named Part A in the Excel file
Part B. (7.5 points) Suppose you are presented with the following investment opportunity: you will invest $200 000 now, and another $ 50 000 at the end of the first year, and get $35 000 at the end of the second year, $15 000 at the end of the fourth year, $40 000 at the end of the sixth year, $250 000 at the end of the seventh year. The interest rate is 10%. Calculate the net present value for the investment option described above using the present value formula. Should you invest in this opportunity? Please provide your answer in the sheet named Part B in the Excel file
Part C. (5 points) Suppose you are presented with the following loan scenario: you will borrow $ 100 000 now, and pay it back in equal installments in twenty years. How much should you pay each year in order to be able to pay your debt back fully? You can assume payments are done at the end of each year. The interest rate is 7%. Please provide your answer in the sheet named Part C in the Excel file
Part D. (5 points) The average price of gold was given as TL 4500 in 2017 and the average annual rate of increase in the price of gold is estimated to be approximately 45%. If we assume that the price of gold will continue to inflate at this rate, how long will it be before the price of gold is TL 20000? Please provide your answer in the sheet named Part D in the Excel file
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