12121 effectiveannualrateear effectiveannualrateear

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Unformatted text preview: e to the next cash flow The “F” is the number of times a given cash flow occurs in consecutive years Use the NPV key to compute the present value by entering the interest rate for I, pressing the down arrow and then compute Clear the cash flow keys by pressing CF and then CLR Work Decisions, Decisions Decisions, Decisions Your broker calls you and tells you that he has this great investment opportunity. If you invest $100 today, you will receive $40 in one year and $75 in two years. If you require a 15% return on investments of this risk, should you take the investment? Use the CF keys to compute the value of the investment CF; CF0 = 0; C01 = 40; F01 = 1; C02 = 75; F02 = 1 NPV; I = 15; CPT NPV = 91.49 No – the broker is charging more than you would be willing to pay. Saving For Retirement Saving For Retirement You are offered the opportunity to put some money away for retirement. You will receive five annual payments of $25,000 each beginning in 40 years. How much would you be willing to invest today if you desire an int...
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This document was uploaded on 01/14/2014.

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