Investment X offers to pay you $5,600 per year for nine years, whereas Investmen

Question

Investment X offers to pay you $5,600 per year for nine years, whereas Investment Y offers to pay you $7,700 per year for six years.

Calculate the present value for Investment X and Y if the discount rate is 4 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Present value
Investment X $
Investment Y $

Calculate the present value for Investment X and Y if the discount rate is 14 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Present Value
Investment X $
Investment Y $

Investment X offers to pay you $5,600 per year for nine years, whereas Investment Y offers to pay you $7,700 per year for six years.

Calculate the present value for Investment X and Y if the discount rate is 4 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Present value
Investment X $
Investment Y $

Calculate the present value for Investment X and Y if the discount rate is 14 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Present Value
Investment X $
Investment Y $

Explanation / Answer

PV of X with discount rate 4%=5600/(1.04^1)+5600/(1.04^2)+5600/(1.04^3)+5600/(1.04^4)+5600/(1.04^5)+5600/(1.04^6)+5600/(1.04^7)+5600/(1.04^8)+5600/(1.04^9)=41637.85

PV of Y with discount rate 4%=7700/(1.04^1)+7700/(1.04^2)+7700/(1.04^3)+7700/(1.04^4)+7700/(1.04^5)+7700/(1.04^6)=40364.45

PV of X with discount rate 14%=5600/(1.14^1)+5600/(1.14^2)+5600/(1.14^3)+5600/(1.14^4)+5600/(1.14^5)+5600/(1.14^6)+5600/(1.14^7)+5600/(1.14^8)+5600/(1.14^9)=27699.68

PV of Y with discount rate 14%=7700/(1.14^1)+7700/(1.14^2)+7700/(1.14^3)+7700/(1.14^4)+7700/(1.14^5)+7700/(1.14^6)=29942.73

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