11. Calculate the present value of payments of RM15,000 per year for 4 years if the first payment starts at end of the 4th year given annual interest rate of 10 percent. 12. How much should you pay for an investment that will pay you a dividend of RM1, 750 for every quarter indefinitely if money is worth 10 percent per annum compounded quarterly for the following scenarios: i. Just after the dividend has been paid. ii. Just before the dividend is due to be paid.

11. Calculate the present value of payments of RM15,000 per year for 4 years if the first payment starts at end of the 4th year given annual interest rate of 10 percent. 12. How much should you pay for an investment that will pay you a dividend of RM1, 750 for every quarter indefinitely if money is worth 10 percent per annum compounded quarterly for the following scenarios: i. Just after the dividend has been paid. ii. Just before the dividend is due to be paid.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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Suppose you have the opportunity to make an investment in a real estate venture that expects to pay investors 750 dolar at the end of each month for the next eight years . You believe that a reasonable return on your investment should be an annual rate of 15 percent compounded monthly.a. How much should you pay for the investment?b. What will be the total sum of cash you will receive over the next eight years?c. What do we call the difference between (a) and (b)?
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