Investments A and B have the net cash flows given. Value UI T Ior Which PW (1)c PW (1)p? 10. End of year 1 4. $ 75 -$250 -$250 $ 75 $150 $175 $ 75 $150 $ 75 В $150 Compare the present worth of A with the present worth of B for an in- terest rate of 5%. Which has the higher value? Answer: A If the interest rate is 15%, which has the higher value? Answer: B а. b. On the same axis, graph the present worth of each investment as a func tion of the interest rate. с. H.

Investments A and B have the net cash flows given. Value UI T Ior Which PW (1)c PW (1)p? 10. End of year 1 4. $ 75 -$250 -$250 $ 75 $150 $175 $ 75 $150 $ 75 В $150 Compare the present worth of A with the present worth of B for an in- terest rate of 5%. Which has the higher value? Answer: A If the interest rate is 15%, which has the higher value? Answer: B а. b. On the same axis, graph the present worth of each investment as a func tion of the interest rate. с. H.

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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Consider the following timeline: Date 0 i + $500 2 OA. $666. B. $605. C. $500. OD. $650. 3 Cash flow If the current market rate of interest is 10%, then the future value of the cash flows on this timeline is closest to:
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %12. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.228861 b.0.204146 c.0.245007 d.0.274516 e.0.181262 f.0.168017 g.0.19667 h.0.264278 -5000 2000 4000 -1500 3000 4000 -6000 9000
Solve for the value of X in the accompanying table, so that the cash flow A is equivalent to the cash flow B. Let i 8% per year. Cash flow A Cash flow B Year Cash flow, $ Year Cash flow, S 2. 8,000 2. 3. 3. 4. -2X 8,000 3X Select one: O a. 8381.6 O b. 9009.4 O c.7126.0 O d. 9637.2 O e. 7753.8 4.
For the following cash flow, if the interest rate i=10%, the present value is closest to: Year 1 2 3 4 Value 1500 1400 1300 1200 Оа. 3,003.55 Ob. 4,316.99 с. 3,879.17 С. Od. 3,441.36
In the following cash flows diagram, Determine the value of F that makes the two cash flows diagrams equivalent if the interest rate i = 12% per year? %3D 100 100 100 100 100 100 F 01 2 3 4 5 6 3 End of Year End of Year a. $428 b. $596 c. $704 d. $686 4,
In the following cash flows diagram, Determine the value of F that makes the two cash flows diagrams equivalent if the interest rate i = 12% per year? 100 100 100 100 100 100 F 1 2 3 4 6 3 5 End of Year End of Year a. $428 b. $596 С. $704 d. $686 O O
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %19. Year Cash Flow 0 -3000 1 2000 2 4000 3 -1000 4 3000 5 4000 6 -5000 7 9000 Select one: a. 0.2988 b. 0.2638 c. 0.2565 d. 0.3073 e. 0.2783 f. 0.3491
What is the present value of the following cash-flow stream if the interest rate is 4%? Year Cash Flow 1 $110 2 310 3 210
Given the following cash flows, what is the future value if the interest rate is 5%? Year 1 2 3 Cash Flow $400 $650 $900 a. $2,053.46 b. $1,676.24 c. $2,023.50 d. $1,798.70
1) Find the PW, AW and FW of the following cashflow if the interest rate compound semiannually. P-7 i-10% --14%- Year $100 $100 S100 $100 $100 S160 $160 SIG0
Which of the following investments has a higher present value, assuming the same (strictly positive) interest rate applies to both investments? Year Investment X Investment Y $5,000 $11,000 2 $7,000 $9,000 $11,000 $9,000 $7,000 $5,000 4 O A. Investment X and Investment Y have the same present value, since the total of the cash flows is the same for both. O B. Investment X has a higher present value. OC. Investment Y has a higher present value. O D. No comparison can be made-we need to know the interest rate to calculate the present value. Click to select your answer. MacBook
The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM $1 $2 $3 $4 5 W 100 200 200 300 1,$300 X 600 – – – – Y – – – – 11,200 Z $200 – $500 – 0,300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a compound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.

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