Investment X offers to pay you $4,200 per year for 9 years, whereas Investment Y

Question

Investment X offers to pay you $4,200 per year for 9 years, whereas Investment Y offers to pay you $6,300 per year for 5 years. if the discount rate is 6 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present value Investment X $ Investment Y $ if the discount rate is 16 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present value Investment X $ Investment Y $

Explanation / Answer

Answer:

a)Present value of

Investment X = $4,200* Present value annuity factor for 9th year @6% = $4,200*6.80169 = $28,567.01

Investment Y = $6,300* Present value annuity factor for 5th year @6% = $6,300*4.21236 = $26,537.87

b)

Investment X = $4,200* Present value annuity factor for 9th year @16% = $4,200*4.6065 = $19,347.3

Investment Y = $6,300* Present value annuity factor for 5th year @16% = $6,300*3.2743 = $20,628.09

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.