Hi, please help kindly help me with these problems. Thanks. 1. You are given thr
ID: 2728667 • Letter: H
Question
Hi, please help kindly help me with these problems. Thanks.
1. You are given three investments alternatives to analyze. The cash flows from these three investment are as follow:
End of Year
A
B
C
1
$3,000
2,000
6,000
2
4,000
2,000
6,000
3
5,000
2,000
(6,000)
4
(6,000)
2,000
(6,000)
5
6,000
5,000
16,000
What is the present value of investment A at an annual discount rate of 16%? (Round to the nearest cent)
2. Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $7,650.24 that will pay them $1,500 per year for 10 years. They don’t have the slightest idea what return they would be making on their investment of $7,650.24. What rate of return would they be earning? (Round to two decimal places).
3. How long it take to pay off a loan of $52,000 at an annual rate of 11 percent compounded monthly if you make a monthly payments of $650? Use five decimal places for the monthly percentage rate in you calculation. (Round to one decimal place).
4. The state lottery’s million-dollar payout provides for $1.5 million to be paid in 20 installments of $75,000 per payment. The first $75,000 payment is made immediately, and the 19 remaining $75,000 payments occur at the end of each of the next 19 years. If 11% is the discount rate, what is the present value of the stream of cash flows? If 22 percent is the discount rate, what is the present value of the cash flows? (Round to nearest cent).
End of Year
A
B
C
1
$3,000
2,000
6,000
2
4,000
2,000
6,000
3
5,000
2,000
(6,000)
4
(6,000)
2,000
(6,000)
5
6,000
5,000
16,000
Explanation / Answer
Answer:1
Year P.V.F (16%) Cash Flow (A) PV (A) 1 0.862068966 3000 2586 2 0.743162901 4000 2973 3 0.640657674 5000 3203 4 0.552291098 -6000 -3314 5 0.476113015 6000 2857 PV of Investment A 8305Related Questions
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