Question
Problem 5-2 Present Value and Multiple Cash Flows [LO 1] Investment X offers to pay you $5,300 per year for 9 years, whereas Investment Y
Problem 5-2 Present Value and Multiple Cash Flows [LO 1]
| Investment X offers to pay you $5,300 per year for 9 years, whereas Investment Y offers to pay you $7,200 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 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 XInvestment Y |
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Forecasting Principles And Practice
Authors: Rob J Hyndman, George Athanasopoulos
1st Edition
0987507109, 978-0987507105
