(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:End of Year1NO456TO2378SA$13,00013,00013,00013,00013,000InvestmentBS$13,00013,00013,00013,000(Round to the nearest cent.)Ca. What is the present value of investment A at an annual discount rate of 25 percent?$37227.32 (Round to the nearest cent.)$18.000b. What is the present value of investment B at an annual discount rate of 25 percent?54.000c. What is the present value of investment C at an annual discount rate of 25 percent?(Round to the nearest cent.)

a.Calculation of the present value of investment:Formula used:

(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: End of Year 1 2 3 45678 A $13,000 13,000 13,000 13,000 13,000 Investment B $13,000 13,000 13,000 13,000 C $18,000 54,000

(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: End of Year 1 2 3 45678 A $13,000 13,000 13,000 13,000 13,000 Investment B $13,000 13,000 13,000 13,000 C $18,000 54,000

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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Question

(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
End of Year
1
NO456TO
2
3
7
8
S
A
$13,000
13,000
13,000
13,000
13,000
Investment
B
S
$13,000
13,000
13,000
13,000
(Round to the nearest cent.)
C
a. What is the present value of investment A at an annual discount rate of 25 percent?
$37227.32 (Round to the nearest cent.)
$18.000
b. What is the present value of investment B at an annual discount rate of 25 percent?
54.000
c. What is the present value of investment C at an annual discount rate of 25 percent?
(Round to the nearest cent.)

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