5. The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Life, Annual Benefit Salvage Value Initial Cost years 4. Option 1 Option 2 $42,000 $45,000 $10,000 $11,500 $4,000 $4,200 6.

5. The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Life, Annual Benefit Salvage Value Initial Cost years 4. Option 1 Option 2 $42,000 $45,000 $10,000 $11,500 $4,000 $4,200 6.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Which of the 2 Present Value has higher cash flow? Compute and justify. Option 1- P1000 in 2 years & P1200 in 3 years Option 2-P1000 in 1 year & P1200 in 2 years
Investment A has a future value of $600. Investment B has a future value of $500. Both have the same present value. All else equal, which one has the higher interest rate? Select one: a. B b. A c. A=B Clear my choice
You are offered the following two choices. You can either receive Option I: 3 annual payments of $100 each to be received exactly 1, 2, and 3 years from now; Or, Option II: one payment of $269 to be received exactly one year from now. The annual interest rate (as an EAR) that would make you indifferent between receiving the above two options is _______%.
Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50. You plan to buy a home for $100,000 in the future. You want to guarantee that you will have the money. What would you buy/sell today to accomplish this, and what would it cost today?
10. You are considering buying an asset which will give you two payments, one payment for one year later and the other for two years later. Assume that the asset pays you $8,000 (sure amount) one year later, but two years later cither $6,000 with the probability of 1/2 or $4,000 with the probability of 1/2. Then what would be the fair price of this asset assuming thati=10%? (How much are you willing to pay now for this asset?
Note: You can use the Payback period only I included the formula and solution on our module for refence
Please Solve ASAP ☺️
suppose you are given an option to invest in two annuity schemes scheme A and scheme B which of the options would you choose? scheme A scheme B Neither Both
Calculate the compounding factor you would use to find the future value of an amount of money you will receive 20 years in the future, assuming a 6% interest rate. Question 14 options: 3.207 3.042 2.498 2.662
USE PRESENT WORTH AND CO-TERMINATED ANALYSIS. Show cashflow diagram and complete solution. Consider the three small mutually exclusive investment alternatives in the tablebelow. The feasible alternative chosen must provide service for a 10-year period.The MARR is 12% per year, and the market value of each is 0 at the end of usefullife. Which alternative should be chosen? Use the imputed market valuetechnique in alternative C, epsilon = 10%
Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10
Two mutually exclusive alternatives A and B are being considered: Year A 1 A 2 0 1 -$2500 $746 -$6000 $1664 2 3 4 5 $746 $746 $746 $746 $1664 $1664 $1664 $1664 The minimum attractive rate of return is 8%. After calculation we can find that the internal rates of return: for A 1, IRRA1 = 17%, for B, IRRA2 = 14% and for A 2-A 1, IRRA2-A1 = 9.8%. Which of the following statements is correct? Select A 1 because IRRA 1 > IRRA 2 Select neither A 1 nor A 2 because IRRA 1 > MARR and IRRA 2 > MARR Select A 1 because IRRA 2-A 1 > MARR select A 2 because IRR 2-1 > MARR

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