Tanya is considering an investment that will require an initial payment of 400,000 and additional payments of 100,000 and 50,000 at the end of years one and two, respectively. It is expected that revenue from this investment will be 150,000 per year for five years, beginning one year from the initial investment. Assuming an annual effective rate of 10%, calculate the net present value of this investment.
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Tanya is considering an investment that will require an initial payment of 400,000 and additional
payments of 100,000 and 50,000 at the end of years one and two, respectively. It is expected that
revenue from this investment will be 150,000 per year for five years, beginning one year from the
initial investment.
Assuming an annual effective rate of 10%, calculate the
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- You are trying to value the following investment opportunity: The investment will cost you $5663 today. In exchange for your investment you will receive cash payments in perpetuity. The first payment will occur after one year and will be $431. Afterwards, cash payments will grow by 1.3% annually. The applicable interest rate for this investment opportunity is 7.6% (effective annual rate. Calculate the NPV of this investment opportunity.An investment promises to pay $5,000 at the end of each year for the next four years and $3,000 at the end of each year for years 5 through 8. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 9 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 9 percent required rate of return?$An investment is expected to pay a return of $5,250 semi-annually (i.e. at the end of each six months) for the next five years. If an investor is willing to pay $40,000 for this investment, what effective rate of return is he earning?
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