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You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment End of year A 1 2
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment End of year A 1 2 3 4 5 6 7 8 9 10 $10,000 10,000 10,000 10,000 10,000 10,000 B. B $10,000 10,000 10,000 C $10,000 10,000 10,000 10,000 10,000 Assuming a 20 percent discount rate, find the present value of each investment. I 50,000 (12 Marks) Determine the present value of an ordinary annuity of $1,000 per year for 10 years with the first cash flow from the annuity coming at the end of year 8 (that is, no payments at the end of years 1 through to 7 and annual payments are at the end of year 8 through 17) given a 10 percent discount rate. (8 Marks)
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