$33,200 $34,500 $42,000 $43,500 The current value of the project%u2019s inflows

Question

       $33,200
       $34,500
       $42,000
       $43,500

       The current value of the project%u2019s inflows is $13,000
       The approximate current value of the project%u2019s inflows is $11,000
       The current value of the project%u2019s inflows cannot be determined
       The project should be rejected because its present value is negative

       $1078
       $1085
       $927
       $1000

14. (TCO 4) You are considering two investments. Investment I is in a software company, and Investment II is an engineering company. The investments offer the following cash flows:
Year Software Company Engineering Company 1 $5,000 $15,000 2 $3,000 $8,000 3 $4,000 $9,000 4 $3,600 $11,000
If the appropriate discount rate is 10 percent, what is the approximate present value of the Engineering Company investment? (Points : 3)

Explanation / Answer

14. PV of ENgg CFs = 15000/(1+10%)^1 + 8000/(1+10%)^2+9000/(1+10%)^3 + 11000/(1+10%)^4 = $34,500

13.

PV of CFs = 6000/(1+10%)^1 + 4000/(1+10%)^2 + 3000/(1+10%)^3

=$11,014

Ans : The approximate current value of the project inflows is $11,000

3. We have FV=1000, COupon = 12%. So PMT=12%*1000=120

nper = 25 yrs, Rate = 13%

So CUrrent price =PV(Rate,nper,pmt,fv)

= PV(13%,25,120,1000) = $927 ...Ans

5.

We have FV=1000, PV=850, PMT= 80

nper = 10 yrs, Rate =??

So YTM =Rate(nper,pmt,pv,fv)

= Rate(10,80,-850,1000)

=10.50% ...........Ans

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