You need to have $33,750 in 11 years. You can earn an annual interest rate of 6 percent for the first 3 years, 6.6 percent for the next 2 years, and 7.3 percent for the final 6 years.
How much do you have to deposit today?
You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 12.7 percent, compounded annually.
End of year 1 | $4,362 |
End of year 2 | $1,410 |
End of year 3 | $1,073 |
End of year 4 | $987 |
What is the present value of this investment if 12.7 percent per year is the appropriate discount rate?
You have been offered the opportunity to invest in a project that will pay $4,501 per year at the end of years one through three and $10,477 per year at the end of years four and five. If the appropriate discount rate is 14.7 percent per year, what is the present value of this cash flow pattern?
A property can be bought today for $2.0 million and sold in 4 years for $3.0 million. (No rental income is earned on the property.)
a. If the interest rate is 12%, what is the present value of the sales price? (Do not round intermediate calculations. Enter the answer in millions rounded to 3 decimal places.)
b. Is the property investment attractive?
c-1. What is the present value of the future cash flows, if one could also earn $100,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter the answer in millions rounded to 3 decimal places.)
c-2. Is the property investment attractive now?