Investment X offers to pay you $5,900 per year for nine years, whereas Investmen

Question

Investment X offers to pay you $5,900 per year for nine years, whereas Investment Y offers to pay you $8,000 per year for six years.

Calculate the present value for Investment X and Y if the discount rate is 4 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Calculate the present value for Investment X and Y if the discount rate is 14 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Investment X offers to pay you $5,900 per year for nine years, whereas Investment Y offers to pay you $8,000 per year for six years.

Explanation / Answer

For the present values check out the A4 table values 9th year & 6th year under 4 & 14%

PROJECTX

YEARS

Cash flows

PV@ 4%

Total PV

     1-9 yrs

5900

7.435

43867

                                                PROJECTX

YEARS

Cash flows

PV@14%

Total PV

     1-9 yrs

5900

4.946

29181

                                                PROJECTY

YEARS

Cash flows

PV@ 4%

Total PV

     1-6 yrs

8000

5.242

41936

                                                PROJECTY

YEARS

Cash flows

PV@14%

Total PV

     1-6 yrs

8000

3.889

31112

YEARS

Cash flows

PV@ 4%

Total PV

     1-9 yrs

5900

7.435

43867

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