2. Present Value and Multiple Cash Flows Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 6. Calculating Annuity Values For each of the following annuities, calculate the present value. Annuity Payment Years Interest Rate $ 1,750 7 1,390 9 18 28 17,500 50,000 5% 10 8 14

2. Present Value and Multiple Cash Flows Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 6. Calculating Annuity Values For each of the following annuities, calculate the present value. Annuity Payment Years Interest Rate $ 1,750 7 1,390 9 18 28 17,500 50,000 5% 10 8 14

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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