Question
You have a firm. The appropriate annual interest rate for all of the firms projects in this problem is 5%. a) (1.5 points) The firm
You have a firm. The appropriate annual interest rate for all of the firms projects in this problem is 5%.
a) (1.5 points) The firm has only 1 project which does not require any investment and pays $1,000 in year 1 (that is 1 year from now). What is the net present value of the project?
b) (1.5 points) The firm has only 1 project which does not require any investment and pays $1,000 every year (forever) starting in year 1. What is the net present value of the project?
c) (1.5 points) The firm has 2 projects. Project 1 does not require any investment and pays $1,000 every year (forever) starting in year 1. Project 2 does not require any investment and pays $1,000 every year (forever) starting in year 2. What is the combined net present value of firms all projects?
d) (1.5 points) The firm has infinitely many projects. Project 1 does not require any invest2 ment and pays $1,000 every year (forever) starting in year 1. Project 2 does not require any investment and pays $1,000 every year (forever) starting in year 2. Project 3 does not require any investment and pays $1,000 every year (forever) starting in year 3. ... Project n does not require any investment and pays $1,000 every year (forever) starting in year n. ... and so on until infinity. What is the combined net present value of firms all projects (in dollars)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Foundations Of Financial Management
Authors: Stanley B Block, Geoffrey A Hirt
12th Edition
0073295817, 9780073295817
