You are considering an investment that will pay you $75,000 semi-annually for 5 years. Assuming you require a minimum rate of return of 8.75 percent, what is the most you are willing to pay for this investment? Assuming a discount rate of 6%, what is the future value of 100,000 per year for 12 years if the payments occur at the beginning of each period? Assuming a required return of 5.5%, how much would you be willing to pay for an investment that pays you and your heirs $50,000 per year in perpetuity?

You are considering an investment that will pay you $75,000 semi-annually for 5 years. Assuming you require a minimum rate of return of 8.75 percent, what is the most you are willing to pay for this investment? Assuming a discount rate of 6%, what is the future value of 100,000 per year for 12 years if the payments occur at the beginning of each period? Assuming a required return of 5.5%, how much would you be willing to pay for an investment that pays you and your heirs $50,000 per year in perpetuity?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?
Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? a. What is the internal rate of return (IRR) of this opportunity? The IRR of this opportunity is%. (Round to two decimal places.) b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? The periodic payment that gives the same IRR is $ (Round to the nearest cent.)
You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1,500 two years from now, and $10,000 ten years from now. a. What is the NPV of the investment opportunity if the interest rate is 8% per year? Should you take the opportunity? b. What is the NPV of the investment opportunity if the interest rate is 4% per year? Should you take the opportunity? a. What is the NPV of the investment opportunity if the interest rate is 8% per year? The NPV of the investment opportunity if the interest rate is 8% per year is $. (Round to the nearest dollar.) Should you take the investment opportunity (Select the best choice below.) A. Reject it because the NPV is less than 0. B. Take it because the NPV is equal to or greater than 0. b. What is the NPV of the investment opportunity if the interest rate is 4% per year? The NPV of the investment opportunity if the interest rate is 4% per year is $ (Round to the nearest dollar.) Should…
You are valuing an investment that will pay you $26,000 per year for the first 4 years, $36,000 per year the next 11 years, $49,000 per year the next 17 years, and $45,000 per year the following 10 years (all payments are at the end of each year). If the appropriate annual discount rate is 6.00%, what is the value of the investment to you today?
You have the opportunity to make an investment that costs $1.000,000. If you make this investment now, you will receive $250,000 one year from today, $200,000, $150,000 and $ 400,000 two and three years from today, respectively. The appropriate discount rate for this investment is 11 percent Should you make the investment? What is the net present value (NPV) of this opportunity?
You are trying to value the following investment opportunity: The investment will cost you $5663 today. In exchange for your investment you will receive cash payments in perpetuity. The first payment will occur after one year and will be $431. Afterwards, cash payments will grow by 1.3% annually. The applicable interest rate for this investment opportunity is 7.6% (effective annual rate. Calculate the NPV of this investment opportunity.
What is the most you would be willing to pay for an investment that will pay you $537 in one year, $856, in two years, and $902 in three years, if your required rate of return for this type of investment is 10% ?
You are offered an investment that requires you to put up $5,000 today in exchange for $12,000 10 years from now. What is the annual rate of return on this investment?
What would be the maximum price you should pay for a 10 year annuity that will provide payments of $800 a year? Assume the appropriate interest rate for this type of investment is 7%. Please break down
How much would you be willing to pay today for an investment that will pay you $2,500,000 in 30 years, assuming your discount rate is 14.25%.
You have $1725 to invest. You know that a particular investment will double your money in five years. How much will you have in 10 years if you invest in this investment, assuming that the annual rate of return is guaranteed for the time period? Cevap:
You are considering a safe investment opportunity that requires a $1,080 investment today, and will pay $710 two years from now and another $610 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is _____________%. (Round to two decimal places.)