An investment advisor offers you a product that will deliver cash-flows at the end of each of the next seven years. The first cashflow is $5,000 and every year thereafter, the cashflow will grow at a rate of 4%. If the annual interest rate is 2%, what is the present value of this opportunity?
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An investment advisor offers you a product that
will deliver cash-flows at the end of each of the
next seven years. The first cashflow is $5,000
and every year thereafter, the cashflow will grow
at a rate of 4%. If the annual interest rate is
2%, what is the present value of this
opportunity?
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- You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 4 years; starting at the following year, an amount of $2, 000 per year until year 14; and after that year, an amount of $9, 000 per year until year 20. If your required rate of return (APR) is 11% compounded annually, what is the present value today of these cash flows?You are told that if you invest $11,100 per year for 19 years (all payments made at the beginning ofeach year) you will have accumulated $375,000 at the end of the period. What annual rate of return is theinvestment offeringSuppose you have the opportunity to make an investment in a real estate venture that expects to pay investors 750 dolar at the end of each month for the next eight years . You believe that a reasonable return on your investment should be an annual rate of 15 percent compounded monthly.a. How much should you pay for the investment?b. What will be the total sum of cash you will receive over the next eight years?c. What do we call the difference between (a) and (b)?
- You are valuing an investment that will pay you $26,000 per year for the first 9 years,$34,000 per year for the next 11 years, and $47,000 per year the following 14 years (allpayments are at the end of each year).Another similar risk investment alternative is an account with a quoted annual interest rate of9.00% with monthly compounding of interest.Required:Calculate the value in today's dollars of the set of cash flows you have been offered i.e.for each investment alternative, and decide which option is more profitable.You are looking at an investment that will make annual payments of $28,000, $32,000, $66,000, and $99,000 to you each year over the next four years, respectively. All payments will be made at the end of the year. If the appropriate interest rate is 3.6 percent, what is the value of the investment offer today?An investment offers to pay you $300 per quarter for 10 years. If the annual rate is 11% with quarterly compounding, then what is the present value of these cash flows?
- Consider an investment that offers $4,000, $5,000 and $6,000 in the next 3 years, with the first payment occurring one year from now. The required return is 7%. What is the present value of this investment?An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If the rate of interest earned on the investment is 8%, what is the present value of this investment? What is its future value? How do you solve this with excel?Suppose you have the opportunity to make an investment in a real estate venture that expects to pay investors $750 at the end of each month for the next eight years. You believe that a reasonable return on your investment should be an annual rate of 15 percent compounded monthly.a. How much should you pay for the investment?b. What will be the total sum of cash you will receive over the next eight years?c. What do we call the difference between (a) and (b)?
- Suppose you have an investment offer that guarantees an average investment gain of $1,000 per year. (a) What is the average rate of change (in dollars per year) of this investment? $? per year (b) If the value of the investment today is $10,000, what will be the value (in dollars) of the investment in 2 years? $?You invest in a project is expected to generate fixed annual cashflows for 4 years beginning in 3 years from today. If the discount rate is 2.5% and the project has a price of $6k today, then what are the fixed annual cashflows? (Round to the nearest cent).An investment offers $6,300 per year, with the first payment occurring one year from now. The required return is 5 percent. What would the value be today if the payments occurred for 10 years? What would the value be today if the payments occurred for 35 years? What would the value be today if the payments occurred for 65 years? What would the value be today if the payments occurred forever?