Hat Corp. can pursue 2 alternative investments. In the first investment, they will receive $3000 per year for the next five years, and a one time payment of $6,000 at the end of the third year. The second investment gives Hat Corp. a one time cash payment today. What amount would hat Corp need to be paid by the second investment so that they are indifferent between the two? (So they are equally well off under either investment) Assume the market rate is 10%. Round to the nearest dollar. please show formulas used and variable imputs.
Hat Corp. can pursue 2 alternative investments. In the first investment, they will receive $3000 per year for the next five years, and a one time payment of $6,000 at the end of the third year. The second investment gives Hat Corp. a one time cash payment today. What amount would hat Corp need to be paid by the second investment so that they are indifferent between the two? (So they are equally well off under either investment) Assume the market rate is 10%. Round to the nearest dollar. please show formulas used and variable imputs.
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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Hat Corp. can pursue 2 alternative investments. In the first investment, they will receive $3000 per year for the next five years, and a one time payment of $6,000 at the end of the third year. The second investment gives Hat Corp. a one time cash payment today. What amount would hat Corp need to be paid by the second investment so that they are indifferent between the two? (So they are equally well off under either investment)
Assume the market rate is 10%. Round to the nearest dollar.
please show formulas used and variable imputs.
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