3 What discount rate would make you indifferent between receiving $3,989 00 per year forever and $5,718.00 per year for21.00 years? Assume the first payment of both cash flow streams occurs in one year.SubrnitAnswer format: Percentage Round to: 2 decimal piaces (Example 9 24%, % sign required Will accept decimal formatrounded to 4 decimal places (ex: 0 0924))

On equating the present value of both the cash streams the rate can be calculated. Present value of…

Answered: What discount rate would make you…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 3CE

See similar textbooks

Similar questions

Present Values Krista Kellman has an opportunity to purchase a government security that will pay $200,000 in 5 years. Required: Note: Round answers to two decimal places. 1. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 6% compounded annually. 2. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 10% compounded annually. 3. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 6% compounded semiannually.
(1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
What discount rate would make you indifferent between recieving $3515.00 per year forever and $5920.00 per year for 30.00 years? Assume the first payment of both cash flow streams occurs in one year. (Answer format: percentage, round to two decimal places)
The appropriate discount rate for the following cash flows is 6.98 percent per year. Year Cash Flow 1 $ 2,400 2 0 3 3,840 4 2,090 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Present Value
The appropriate discount rate for the following cash flows is 7.83 percent per year. Year Cash Flow 1 $ 2,570 2 0 3 4,010 4 2,260 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,400 per year for 5 years. If the discount rate is 7 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. If the discount rate is 23 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Assume the appropriate discount rate for the following cash flows is 10.2 percent. Year Cash Flow 1 $2,100 2 2,000 3 1,700 4 1,500 What is the present value of the cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A certain commodity can be bought in cash for $ 200,000.00. However, the agent allows to purchase the commodity in 9 equal payments, the first being due at the end of 10 year with an interest of 7.50% compounded continuously. a) Find the annual payments b) detemine the compound amount factor of the uniform payment series and the sinking fund factor.
Investment X offers to pay you $5,400 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) If the discount rate is 21 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

SEE MORE TEXTBOOKS