Assume an investment is priced today at $5,000 and has the following income stream: Year Cash Flow 1 1234 2 3 4 $1,000 - 2,000 3,000 3,000 Would an investor with a required rate of return of 15 percent be wise to invest at a price of $5,000? Multiple Choice No, because the investment has a net present value of - $1.139.15. No, because the investment has a net present value of - $1,954.91. Yes, because the investment has a net present value of $1,069.66. Yes, because the investment has a net present value of $1,954.91. An investor would be indifferent between purchasing and not purch the stated price

Assume an investment is priced today at $5,000 and has the following income stream: Year Cash Flow 1 1234 2 3 4 $1,000 - 2,000 3,000 3,000 Would an investor with a required rate of return of 15 percent be wise to invest at a price of $5,000? Multiple Choice No, because the investment has a net present value of - $1.139.15. No, because the investment has a net present value of - $1,954.91. Yes, because the investment has a net present value of $1,069.66. Yes, because the investment has a net present value of $1,954.91. An investor would be indifferent between purchasing and not purch the stated price

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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Hi can you help with this question please? An investment has the following cash flow profile. For each value of MARR below, what is the minimum value of X such that the investment is attractive based on an internal rate of return measure of merit? EOY 0 1 2 3 4 Cash Flow $(30,000.00) $ 6,000.00 $ 13,500.00 $X $ 13,500.00 MARR is 12 percent/year
ou invest $1000at time t=0 and an additional $5000 at time t=1/2. At time t=1/2 you have $1300 in your account and at time t=1 you have $6100 in your account. Find the dollar-weighted rate of return rd and the time-weighted rate of return rt on this investment.
What is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percent
What is the net present value of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 41 b. 28 c. 34 d. 35
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Time: Cash flow: 0 1 3 4 -$233,000 $65,600 $83,800 $140, 800 $121,800 MIRR Use the MIRR decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. 5 $81,000 %
you are considered an investment with the following cash flows. If the required rate of return for that investment is 13.5% should you accept it based solely on the internal rate of return Year. Cash flows 1. -$12000 2. $5500 3. $8000 4. -$1500 A. yes, because the IRR exceeds the required return B. yes, because the IRR is a positive rate of return C. No, because the IRR is less than the required return D. you cannot apply the IRR rule in this case because there are multiple IRRs.
You identify an investment project with the following cash flows. If the discount rate is 10%, what is the present value of these cash flows? Y1- $500 Y2- $550 Y3- $800 Y4- $450. Please type answer no write by hend.
Consider an investment project that has an internal rate of return of 9%, requires an initial investment in moment zero of £ 55000 and has the expected stream of cash flows (CF) for the next three years as follows: The expected cash flow for year 2 is: £23998 lita_mast O b. It is not possible to compute with given information OC. £ 28474 Clear my choice Equity beta differs from Asset beta: Year 1 2 3 master Lor 11000 ? 32000 O a. Because the existence of debt implies the consideration of the respective tax shield which benefits the equity holder. Ob. Because the equity holder exposure to systemic risk is the riskiest among all stakeholders, independently of financing decisions. Because in case of existing debt, the equity holder exposure to the systemic risk is the highest among all stakeholders.
Consider the following cash flow profile, and assume MARR is 11 percent/year. ΕΟΥ NCF $-115 1 $19 $19 3 $19 4 $19 5 $19 $19 a. What does Descartes' rule of signs tell you about the IRR(s) of the project? b. What does Norstrom's criterion tell us about the IRR(s) of this project? c. What is the IRR(s) for this project?
Suppose that we make contributions to a fund of $125 today and $750 in twoyears for a return of $1000 in one year. First write the Net Present Value as a function of the discount factor ν. Secondly, use the NPV to calculate the yield rate of this investment (select the larger value for i. Finally, explain whether or not this is a good investment for us. Please show all work
You are considering an investment project with the cash flows of -300 (the initial cash flow), 700 (cash flow at year 1), -200 (cash flow at year 2). Given the discount rate of 10%, compute the Modified Internal Rate of Return (MIRR) using the discounting approach. 50.44% 10.72% O 28.64% O 37.84%
You have the opportunity to make an investment that costs $1.000,000. If you make this investment now, you will receive $250,000 one year from today, $200,000, $150,000 and $ 400,000 two and three years from today, respectively. The appropriate discount rate for thisinvestment is 11 percent. .a. Should you make the investment?b. What is the net present value (NPV) of this opportunity?c. If the discount rate is 10 percent, should you invest? Compute the NPV to support youranswer.

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