Q₁: Three investments are available, but only one can be pursued: 1. Invest $10,000 and obtain $5000/yr for 2 yrs, plus $1000 in 5th yrs; 2. invest $10,000 and receive $5000, $4000, $3000, $2000, and $1000 respectively (el over the next 5 yrs; 3. invest $10,000 and receive $2500/yr for 5 yrs, plus $10,000 in 5th yrs. if i=10% Which is the best investment?

Q₁: Three investments are available, but only one can be pursued: 1. Invest $10,000 and obtain $5000/yr for 2 yrs, plus $1000 in 5th yrs; 2. invest $10,000 and receive $5000, $4000, $3000, $2000, and $1000 respectively (el over the next 5 yrs; 3. invest $10,000 and receive $2500/yr for 5 yrs, plus $10,000 in 5th yrs. if i=10% Which is the best investment?

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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(algorithmic) Choose the closest answer below. O Points: 0 of 1 K If you invest $4,874 in a long-term venture, you will receive $1,035 per year forever. Assuming your interest rate is 11% per year, what is the capitalized worth of your investment? OA. The capitalized worth of your investment is $4,764. OB. The capitalized worth of your investment is $4,535. OC. The capitalized worth of your investment is $3,934. OD. The capitalized worth of your investment is $3,942. Save
The four people below have the following investments. Invested Amount $ 11, 200 14, 200 21, 200 17,200 Jerry Elaine George Kramer Reg 1A Required: 1-a. Calculate the future value at the end of three years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 1-b. Who has the greatest investment accumulation? Jerry Elaine Interest Rate Complete this question by entering your answers in the tabs below. Req 1B George Kramer 12% 8 7 9 Compounding Quarterly Semiannually Future Value Annually Annually Calculate the future value at the end of three years. Note: Use Excel or a financial calculator Round your answers to 2 decimal places.
Consider the six indivisible investment alternatives shown below. The planning horizon is 8 years. The MARR is 15%. $60,000 is available for investment. a. Which investments should be made in order to maximize present worth? b. Solve part a when investments N and P are mutually exclusive and R is contingent on Q.
K You have been offered a unique investment opportunity. If you invest $11,300 today, you will receive $565 one year from now, $1,695 two years from now, and $11,300 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.7% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.7% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 5,7% per year? If the cost of capital is 5.7% per year, the NPV is $. (Round to the nearest cent.)
Compare these two investments A: A USD 1,000,000 investment that earns USD 50,000 in interest. B: A USD 200,000 investment that earns USD 15,000 in interest. • Which one generates more investment? • Which one earns a higher return on investment? • Which is the best investment option?
Ken Francis is offered the possibility of investing $4,266 today; in return, he would receive $12,000 after 12 years. What is the annual rate of interest for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "PV of a single amount" to 4 decimal places and percentage answer to the nearest whole number.) Present Value 1 Future Value 1 p (PV of a Single Amount) Interest Rate %6
You are thinking about investing in a project that will provide you a cash flow of $78922 in 3 years and of $88519 in 4 years. If your required return on investments of this risk is 15.14%, how much are you willing to pay for this opportunity? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. Answer:
Q3. Suppose you have 5 investments lasts for exactly 10 years and the investors can choose only one investment option. Which ones should be chosen? Explain your answer? Note: The decision is made based on 20% MARR Investment Opportunity 1 3 4 5 Initial investment 25,000 15,000 70,000 50,000 40,000 Annual Return 5,000 3,750 14,250 11,250 9,250 Salvage Return 25,000 15,000 70,000 50,000 40,000 Inter Rate of Return
You are thinking about buying a real estate property. If you buy the property, you think you will sell it for $714663 in 8 years. If your required return on investments of this risk is 10.54%, what is the most that you should be willing to pay for the property? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.
8. 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: 2. 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%). Review Only Click the icon to see the Worked Solution (Calculator Use). Click the icon to see the Worked Solution (Spreadsheet Use). The yield for investment A is %. (Round to two decimal places.) The yield for investment B is %. (Round to two decimal places.) The yield for investment C is %. (Round to two decimal places.) The yield for investment D is %. (Round to two decimal places.) The yield for investment E is %. (Round to two decimal places.) 2: Data Table Initial Future End of Investment Investment Value Year A $1,800 $6,387 14 B $9,500 $14,353 11 $600 $3,091 17 D $3,500 $4,505 3 E $5,800 $12,092 12 (Click on the icon located on the…
Suppose you have a financial investment opportunity for which if you invest $2,000 today, you will receive $100 per year for 3 years plus $2,500 in the third year. Is this worthwhile in financial terms if the interest rate on the best alternative use of the funds is 10% How would I plug this into a finacial calculator? usin N, I/Y, PV, PMT,FV
You have the opportunity to invest in a project with the following cash flows. Initial investment/Outlay today: $11,000. Cashflow back to you in 1 year $6000 Cashflow back to you in 2 years $5000 Scrap Value in 2 years $500 Assume interest rates are 5% in the 1 year and 7% in the 2 year. (tip: use the spreadsheet “NPV” from Moodle to helpin your calculations) a. Calculate the NPV of the project (show formula/workings)? b. Should you invest in this project? Why ?

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