Question
Your investment over one year had a realized return of 8.65% and a dividend of $2.65. If the sale price was $42.58 per share, what
What is the dollar difference (on an absolute basis) in the present value of receiving $9,000 annually for seven years if you are comparing an ordinary annuity with an annuity due? Assume a discount rate of 8% per year.
A manufacturer of video games develops a new game over two years. This costs $850,000 immediately and a second amount of $850,000 at the end of Year 2. When the game is released, it is expected to make $1.2 million per year for three years after that (i.e. from Year 3 to Year 5). What is the net present value of this decision if the cost of capital is 10%?
You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $1,200 in Year 1, $2,350 in Year 2, and $8,975 in Year 5. What is the NPV of the opportunity if the cost of capital is 9% per year?
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SOLUTION 1 Cost of Investment To calculate the cost of the investment we need to use the formula for calculating the original investment amount based on the realized return dividend and sale price Sal...Get Instant Access to Expert-Tailored Solutions
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