Finance
1. What is the present value of $800 to be received at the end of eight years, assuming the following annual interest rate?
a. 4 percent, discounted annually
b. 8 percent, discounted annually
c. 20 percent, discounted quarterly
d. 0 percent
2. BASIC 13. Two investment opportunities are open to you: Investment 1 and Investment 2. Each has an initial cost of $10,000. Assuming that you desire a 10 percent return on your initial investment, compute the net present value of the two alternatives and evaluate their relative attractiveness:
Investment 1 Investment 2 Cash Flows Year Cash Flows Year 5,000 1 8,000 1 6,000 2 7,000 2 7,000 3 6,000 3 8,000 4 5,000 4
Finance
1. What is the present value of $800 to be received at the end of eight years, assuming the following annual interest rate?
a. 4 percent, discounted annually
b. 8 percent, discounted annually
c. 20 percent, discounted quarterly
d. 0 percent
2. BASIC 13. Two investment opportunities are open to you: Investment 1 and Investment 2. Each has an initial cost of $10,000. Assuming that you desire a 10 percent return on your initial investment, compute the net present value of the two alternatives and evaluate their relative attractiveness:
| Investment 1 | Investment 2 | ||
| Cash Flows | Year | Cash Flows | Year |
| 5,000 | 1 | 8,000 | 1 |
| 6,000 | 2 | 7,000 | 2 |
| 7,000 | 3 | 6,000 | 3 |
| 8,000 | 4 | 5,000 | 4 |
Related questions
| 1. What is the payback period for the following set of cash flows? |
| Year | Cash Flow |
| 0 | â$ 7,200 |
| 1 | 2,700 |
| 2 | 1,400 |
| 3 | 1,700 |
| 4 | 2,600 |
| 2. An investment project has annual cash inflows of $6,000, $7,100, $7,900, and $9,200, and a discount rate of 16 percent. |
Required:
| What is the discounted payback period for these cash flows if the initial cost is $9,500?
|
| 4. What is the internal rate of return on an investment with the following cash flows? |
| Year | Cash Flow |
| 0 | â$118,000 |
| 1 | 44,900 |
| 2 | 32,500 |
| 3 | 48,750 |
| 5. What is the profitability index for an investment with the following cash flows given a 6 percent required return? |
| Year | Cash Flow |
| 0 | â$21,000 |
| 1 | 7,700 |
| 2 | 10,000 |
| 3 | 9,400 |
