Mahmut Tutam is considering making an investment of $80,000 in a venture that is projected to yield annual returns over a 15-year period with the following cash flow profile: Year Cash Flow Year Cash Flow Year Cash Flow 1 $10,000 6 $15,000 11 $15,000(0.7)5 2 $11,000 7 $15,000(0.7) 12 12 $15,000(0.7)6 3 $12,000 8 $15,000(0.7)² 13 $15,000(0.7)7 4 $13,000 9 $15,000(0.7)³ 14 $15,000(0.7) 5 $14,000 10 10 $15,000(0.7) 15 $15,000(0.7) Part a Should he make the investment if his time value of money is 5%? Click here to access the TVM Factor Table calculator. PW-$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±5. The investment be made.
Mahmut Tutam is considering making an investment of $80,000 in a venture that is projected to yield annual returns over a 15-year period with the following cash flow profile: Year Cash Flow Year Cash Flow Year Cash Flow 1 $10,000 6 $15,000 11 $15,000(0.7)5 2 $11,000 7 $15,000(0.7) 12 12 $15,000(0.7)6 3 $12,000 8 $15,000(0.7)² 13 $15,000(0.7)7 4 $13,000 9 $15,000(0.7)³ 14 $15,000(0.7) 5 $14,000 10 10 $15,000(0.7) 15 $15,000(0.7) Part a Should he make the investment if his time value of money is 5%? Click here to access the TVM Factor Table calculator. PW-$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±5. The investment be made.
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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Transcribed Image Text:Mahmut Tutam is considering making an investment of $80,000 in a venture that is projected to yield annual returns over a 15-year
period with the following cash flow profile:
Year
Cash Flow
Year
Cash Flow
Year
Cash Flow
1
$10,000
6
$15,000
11
$15,000(0.7)5
2
$11,000
7
$15,000(0.7)
12
12
$15,000(0.7)6
3
$12,000
8
$15,000(0.7)²
13 $15,000(0.7)7
4
$13,000
9
$15,000(0.7)³
14 $15,000(0.7)
5
$14,000
10
10
$15,000(0.7)
15
$15,000(0.7)
Part a
Should he make the investment if his time value of money is 5%?
Click here to access the TVM Factor Table calculator.
PW-$
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±5.
The investment
be made.
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