Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y

Question

Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y offers to pay you $10,200 per year for 5 years.

A- If the discount rate is 6 percent, what is the present value of these cash flows?

Investment X:-?????

Investment Y:-?????

B-If the discount rate is 22 percent, what is the present value of these cash flows?

Investment X:-?????

Investment Y:-?????

Explain it please

Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y offers to pay you $10,200 per year for 5 years.

A- If the discount rate is 6 percent, what is the present value of these cash flows?

Investment X:-?????

Investment Y:-?????

B-If the discount rate is 22 percent, what is the present value of these cash flows?

Investment X:-?????

Investment Y:-?????

Explain it please

Explanation / Answer

Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y offers to pay you $10,200 per year for 5 years.

A- If the discount rate is 6 percent, what is the present value of these cash flows?

Investment X:-

PMT =7500, nper = 9 , rate = 6%, fv =0

Present value of these cash flows = pv(rate,nper,pmt,fv)

Present value of these cash flows = pv(6%,9,7500,0)

Present value of these cash flows = $ 51,012.69

Investment Y:-

PMT =10200, nper = 5 , rate = 6%, fv =0

Present value of these cash flows = pv(rate,nper,pmt,fv)

Present value of these cash flows = pv(6%,5,10200,0)

Present value of these cash flows = $ 42,966.11

B-If the discount rate is 22 percent, what is the present value of these cash flows?

Investment X:-

PMT =7500, nper = 9 , rate = 22%, fv =0

Present value of these cash flows = pv(rate,nper,pmt,fv)

Present value of these cash flows = pv(22%,9,7500,0)

Present value of these cash flows = $ 28,397.14

Investment Y:-

PMT =10200, nper = 5 , rate = 22%, fv =0

Present value of these cash flows = pv(rate,nper,pmt,fv)

Present value of these cash flows = pv(22%,5,10200,0)

Present value of these cash flows = $ 29,209.13

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