Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- You are considering investing in a security that will pay you $5,000 in 29 years. If the appropriate discount rate is 12 percent, what is the present value of this investment? b. Assume these investments sell for $2,423 in return for which you receive $5,000 in 29years. What is the rate of return investors earn on this investment if they buy it for $2,423? If the appropriate discount rate is 12 percent, the present value of this investment isarrow_forward(Use Calculator or Formula Approach) Suppose you need $15,000 in 3 years . If you can earn 6% annually, how much do you need to invest today? If you could invest the money at 8%, would you have to invest more or less than at 6%? How much?arrow_forwardYou’re trying to choose between two different investments, both of which will cost $65,000 today. Investment A will give you $125,000 in 6 years and Investment B will give you $205,000 in 10 years. Which of the two investments should you choose? Why? How will your answer change, if any, if interest rates are expected to increase over the next 10 years. (Explain using the appropriate equations and show all work)arrow_forward
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- You are considering an investment manufacturing cocoa powder. This investment needs $185,000 today and expects to repay you $200,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your discount rate is 11%. What does the IRR rule say about whether you should invest? a. The IRR is 7.5%. The IRR rule says that you should not invest. b. The IRR is 8.11%. The IRR rule says that you should not invest. c. The IRR is 1.2%. The IRR rule says that you should not invest. d. The IRR is 16.8%. The IRR rule says that you should invest.arrow_forwardWhat is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on this investment?arrow_forwardYou are considering an investment that will pay you $3,000 a year for 33 years, starting today. What is the present value of this investment if the appropriate discount rate is 8%? Use TMV calculator in explanation.arrow_forward
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