What is the present value of an investment that promises to pay the investor $6,500 at the end of each year for the next 9 years if the investor desires a 14% rate of return?. a. $ 32,151 b. $ 36,653 c. $ 58,500 d. $ 50,610

What is the present value of an investment that promises to pay the investor $6,500 at the end of each year for the next 9 years if the investor desires a 14% rate of return?. a. $ 32,151 b. $ 36,653 c. $ 58,500 d. $ 50,610

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

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Question

What is the present value of an investment that promises to pay the investor $6,500 at the end of each year for the next 9 years if the investor desires a 14% rate of return?.

a.

$ 32,151

b.

$ 36,653

c.

$ 58,500

d.

$ 50,610

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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