End of Year 1 2 Investment 3 4 5 A B $ 1,000 $1,000 2,000 1,000 3,000 1,000 (4,000) 1,000 4,000 3,000 Click on the icon in order to copy its contents into a spreadsheet.) What is the present value of each of these three investments if the appropriate discount rate is 9 percent? C $ 5,000 5,000 (5,000) (5,000) 15,000 a. What is the present value of investment A at an annual discount rate of 9 percent? (Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 9 percent?
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- You are evaluating five different investments, all of which involve an upfront outlay of cash. Each investment will provide a single cash payment back to you in the future. Details of each investment appears here:. Calculate the IRR of each investment. State your answer to the nearest basis point (i.e., the nearest 1/100th of 1%, such as 3.76%). The yield for investment A is %. (Round to two decimal places.) Initial Future Investment Investment Value Im A $1,900 $4,029 B $9,600 $13,121 C $500 D $3,200 E $5,900 Data table $1,759 $4,139 $9,079 End of Year 11 9 18 3 12 I XYour investment will pay you the following cash flow stream: YEAR | CASH FLOW 1 |200 2 10 3 100 4 100 If your required rate of return is 12%, what is the value (i. e., present value ) of this investment at time 0? What is the future value at the end of year 7? Please explain in steps to input on BA II Plus calculatorPRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $500 at the end of Year 6. a. If other investments of equal risk earn 8% annually, what is its present value? Round your answer to the nearest cent. b. If other investments of equal risk earn 8% annually, what is its future value? Round your answer to the nearest cent. A
- You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment? Group of answer choices The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, hence that each payment is for $10,000 rather than for $20,000. The discount rate decreases. The riskiness of the investment's cash flows increases. The total amount of cash flows remains the same, but more of the cash flows are received in the later years and less are received in the earlier years. The discount rate increases.A. Which of the following investments is worth the most to a rational investor, and why? Assume the appropriate discount rate is 10% and that, unless indicated otherwise, all cash flows are to be received at the end of the year. i) Year 1 cash flow: $100 Year 2 cash flow: $500 Year 3 cash flow: $400 Year 4 cash flow: $300 Year 5 cash flow: $600 $100 per year to be paid forever, growing at 3% annually $300 to be received at the beginning of each year for five ii) iii) years, starting today iv) $600 invested today for a five year term $2,000 lump sum to be received in six years' time $325 to be received each year for five year vi)Castle Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $225,000; Year 2, $165,000; Year 3, $120,000. The company uses a discount rate of 9% and the initial investment is $325,000. F(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Inflow PV Factor (i = 9%) Years Year 1 Year 2 Year 3 Present value of each year's inflow: (n = 1) Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Total PV of cash inflows Year 0 Initial investment Net present value of the project example Get more help. Present Value Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8…
- The cash flow profile for an investment is given below and the interest rate is 8% compounded annually.a. Find the present worth of this series using the actual cash flows. b. Find the future worth of this cash flow series using the actual cash flows. c. Find the future worth using the present worth. d. Find the worth of the series at EOY 4 using the individual cash flows. e. Find the present worth using the worth at EOY 4.Hicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows…(Present value of complex cash flows) You have an opportunity to make an investment that will pay $100 at the end of the first year, $300 at the end of the second year, $500 at the end of the third year, $300 at the end of the fourth year, and $200 at the end of the fifth year. a. Find the present value if the interest rate is 7 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the = NPV function in Excel or to use your CF key on a financial calculator-but you'll want to check your calculator's manual before you use this key. Keep in mind that with the NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF, is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF = 0.) b. What would happen to the present value of…
- If you invest $9,400 per period for the following number of periods, how much would you have received at the end? ( Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. 12 years at 6 percent. Future value $ b. 18 years at 8 percent. Future value $ c. 25 periods at 16 percent. Future value $(IRR calculation) Your investment advisor has offered you an investment that will provide you with a single cash flow of $10,000 at the end of 20 years if you make an annual payment of $200 per year in the interim period. Specifically, the annual payments begin immediately and extend through the end of year 19. You then receive the $10,000 at the end of year 20. Find the internal rate of retum on this investment This investment's internal rate of retum is%. (Round to two decimal places) CYou will receive the following cash flows at the end of each year for the next 5 years. Year 1: $1,500; Year 2: $3,500; Year 3: $9,500; Year 4: $0; Year 5: $1,500. You can invest the money at an annual return rate of 8%. What is the present value of this stream of future cash flows? Group of answer choices $12,325.07 $12,951.86 $13,033.53 $13,988.00