None You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational,run clinical trials, obtain FDA approval, and sell to a buyer for $250,000. Assume a discount rate of 7% compounded annually. What isthe value today of discovering the medical device, assuming you sell it for $250,000 in (a) two years, (b) three years, or (c) four years?(FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.)PaymentAmountInterestRateCompounding Period DuePresentValue$ 250,0007%Annually2 years317,450.00b.250,0007%Annually3 yearsL250,0007%Annually4 years

Present Value is a financial concept used to determine the current worth of a future sum of money,…

Answered: You believe you have discovered a new…

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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You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $520,000. Assume a discount rate of 6% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $520,000 in (a) two years, (b) three years, or (c) four years? (FV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) a. b. C. Payment Amount $ 520,000 520,000 520,000 Interest Rate Compounding Period Due 6% Annually 6% Annually 6% Annually 2 years 3 years 4 years Present Value
You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $290,000. Assume a discount rate of 4% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $290,000 in (a) two years, (b) three years, or (c) four years? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it? give excel file solution
You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it?
Please solve correctly . You are considering purchasing a dump truck. The truck will cost $75,000 and have operating and maintenance costs that start at $18,000 the first year and increases by $2,000 per year. Assume that the salvage value at the end of five years is $22,000 and interest rate is 15%. What is the annual operation and maintenance costs of owning this vehicle?
Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual cash flow from the technology to be $176,000, received two years from today. Subsequent annual cash flows will grow at 3.6 percent in perpetuity. What is the value of the technology next year if the discount rate is 9 percent? What is the present value of the technology if the discount rate is 9 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15 years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600 and have no income from the property. Assuming that you would want a 10% rate of return from the investment, a) Draw a cashflow diagram. b) What net price would you have to sell it in the next 15 years?
As an investor, you have an opportunity to make an investment in real estate costing $100,000 today. This investment would provide you with monthly cash income of $650 at the end of each month for 20 years (240 months). What is the internal rate of return (IRR)? (We take 20 years into account without selling the property, and the IRR is the annual rate of growth that your investment is expected to generate.) • Please provide both the IRR and RATE function results in an Excel file.
Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $95,300. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
You are considering purchasing an investment contract that will eventually pay you $4000 per year at the end of each year for seven years. The appropriate interest rate for the risks involved is 6.4% The first payment begins in 6 years. What price should you pay today to purchase this contract (rounded to nearest dollar) ?
An example of how to calculate net present value is done using the following. Imagine you have been given an investment opportunity wherein if you invest $1,200 today, you will receive $650 dollars at the end of each year for the next 5 years. You could separately choose to invest your money at 10% interest each year. Should you take the investment opportunity? To find the answer, use the NPV formula:
Your goal is to spend a year traveling around the world. You assume that it will cost $100,000 to accomplish this goal and you have 10 years to save for it. You presently have $10,000 to invest. What annual rate of compounding interest must you earn on your investment to cover the cost of this trip?

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