Question 23 As part of a project appraisal, a Future Value (FV) of £8900 in 2 years time, is discounted at a rate of 9% per annum. Calculate the Present Value (PV). (to 2 d.p.)
Question 23 As part of a project appraisal, a Future Value (FV) of £8900 in 2 years time, is discounted at a rate of 9% per annum. Calculate the Present Value (PV). (to 2 d.p.)
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:Question 23
As part of a project appraisal, a Future Value (FV) of £8900 in 2 years time, is discounted
at a rate of 9% per annum. Calculate the Present Value (PV).
(to 2 d.p.)
The following information is required for Questions 24 and 25.
A discount rate of 8.1% per annum is being used to calculate the Net Present Value (NPV) of a project.
The table below shows a student's attempt to find the NPV.
Unfortunately a significant error has occurred in one of the discount factors (DF) and hence the PV for that year.
Year
Cash In
Cash Out
Cashflow
DF
PV
1600
-1600
1
-1600
1100
200
900
0.92507
832.56
2
1000
300
700
0.85575
599.03
3
900
400
500
1.26321
631.61
4
800
400
400
0.73231
292.92
Question 24
Decide in which Year the error occurred and state the correct discount factor.
(to 5 d.p.)
(Only correct discount fa
Question 25
For the Year in which the error occurred, work out the correct PV.
(to 2 d.p.)
Question 26
Copy and paste this table elsewhere to find the Net Present Value (NPV) of the whole project using a discount rate of 9.3%.
Year
Cash In
Cash Out
Cashflow
DF
PV
2900
-2900
1
-2900
1
1600
100
1200
200
3
1100
300
(to 2 d.p.)
The following information is required for Questions 27 and 28.
For each of the datasets displayed in Questions 27 and 28 choose the number from the list
below which is the mostly likely value of the product moment correlation coefficient, r.
-4
-1
-0.9
-0.4
0.4
0.9
1 4
Question 27
90
80
70
60
50
40
30
20
10
20
40
60
80
100
Question 28
100
90
80
70
60
50
40
30
20
10
20
40
60
80
100
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