An investment pays $1,950 per year for the first 3 years, $3,900 per year for the next 8 years, and $5,850 per year the following 11 years (all payments are at the end of each year). If the discount rate is 13.00% compounding quarterly, what is the fair price of this investment? Work with 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.   $18,962.98 $24,951.29 $20,460.05 $25,450.31 $24,701.77

Question
An investment pays $1,950 per year for the first 3 years, $3,900 per year for the next 8 years, and $5,850 per year the following 11 years (all payments are at the end of each year). If the discount rate is 13.00% compounding quarterly, what is the fair price of this investment?

Work with 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.
 
$18,962.98
$24,951.29
$20,460.05
$25,450.31
$24,701.77

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in
BusinessFinance

Future value and Present value

Related Finance Q&A

Find answers to questions asked by students like you.

Q: On June 1st, 2014 Brandon invested $4 500 in a GIC at an annual interest rate that was compounded qu...

A: In compound interest, interest earned during first period is added to the principal for computation ...

Q: How should (a) signaling and (b) the clienteleeffect be taken into account by a firm as it considers...

A: “Since you have asked multiple questions, we will solve the first question for you. If you  want any...

Q: Why is there a cost associated with reinvestedearnings?

A: There is some adaptability in the measure of funds that will be created from new reinvested earnings...

Q: Grey Wolf, Inc., has current assets of $2,090, net fixed assets of $9,830, current liabilities of $1...

A: CURRENT ASSETS = 2090FIXED ASSETS = 9830CURRENT LIABILITY = 1710LONG TERM DEBT = 4520  

Q: 1.discuss the view that interes rate risk management has been the most crucial in the risk managemen...

A: Hi, since there are multiple questions posted, we will answer the first question. If you want any sp...

Q: Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equip...

A: Year Cashflow 1 Cashflow 2 0 -175000 -185000 1 76000 87000 2 83000 78000 3 67000 69000 4 6...

Q: Michelle Walker is interested in buying the stock of Sandhill, Inc., which is increasing its dividen...

A: Calculation of current value of stock: Answer: Current value of stock is $53.85 Given information: D...

Q: Now suppose a firm has the following information: $7 million insales, $4 million of costs of goods s...

A: SALE = 7,000,000COST OF GOODS SOLD = 4,000,000OTHER EXPENSES = 500,000

Q: Discus the view that interest rate risk management has been the most crucial in the risk management ...

A: Interest rate risk is the risk of changing market rates which would affect the income and expenses o...