a)
To rank: The alternatives from the most valuable to least valuable if the rate of interest is 10% for a year.
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.
b)
To rank: The alternatives from the most valuable to least valuable if the rate of interest is 5% for a year.
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.
c)
To rank: The alternatives from the most valuable to least valuable if the rate of interest is 20% for a year.
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.
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Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
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- Assume that at the beginning of the year, you purchase an investment for $6,300 that pays $130 annual income. Also assume the investment's value has increased to $6,900 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return % b. Is the rate of return a positive or a negative number? Positive Negativearrow_forwardSuppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years?Approach(i) The first $100 is contributed in one year’s time and has to wait 4 years to “mature”. Write an equation describing this.(ii) The second $100 is contributed in two year’s time and has to wait 3 years to “mature”. Write an equation describing this.arrow_forwardSuppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years? Approach (i) The first $100 is contributed in one year's time and has to wait 4 years to "mature". Write an equation describing this. (ii) The second $100 is contributed in two year's time and has to wait 3 years to "mature". Write an equation describing this. (iii) The third $100 is contributed in three year's time and has to wait 2 years to "mature". Write an equation describing this. (iv) Continue with this logic and sum all the matured values expressedarrow_forward
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