{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Finance Quiz 2 - first payment in 8 years if you can earn 7...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Kyle Finke B.A. 5352 October 21, 2009 Quiz 2 1. A firm invests $350,000 in a project that is expected to produce annual cash flows of $100,000 per year for the first two years, $80,000 per year for the next two years, and $50,000 in the fifth year. If the required return on the project is 12%, what is its NPV? - npv(12,0,{100,000, 100,000, 80,000, 80,000 50,000} =305,160.31 – 350,000 = $-44,839.69 2. How much must you invest today to be able to make four annual payments of $30,000 each with the
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: first payment in 8 years, if you can earn 7%? $-63,281.55 – npv(7,0{0, 0, 0, 0, 0, 0, 0, 30, 30, 30, 30} 3. If you invest $5000 in an account that pays 7% compounded quarterly for 5 years, then move it to an account that pays 7.5% compounded monthly, how much will you have after 5 years at the new rate? Quarterly N=5 x 4 =20 I = 7% / 4 = 1.75% $7,073.89 quarterly after 5 years After next 5 years (monthly) : N=5x12 = 60 I = 7.5% / 12 =.625% PV= - 7,073.89 FV = $10,280.44...
View Full Document

{[ snackBarMessage ]}