Investment X offers to pay you $6,900 per year for 9 years, whereas Investment Y

Question

Investment X offers to pay you $6,900 per year for 9 years, whereas Investment Y offers to pay you $9,300 per year for 5 years. If the discount rate is 7 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present Value nvestment X Investment Y lf he discount rate is 21 percent, what is the present value of these cash fl s? Do not round intermediate calcu ations and round your ans vers o 2 de mal piaces e. 321 Present Value Investment X Investment Y

Explanation / Answer

Investment X

FV = 0, PMT = 6900, rate = 7%, N = 9

use PV function in Excel

PV when rate is 7 percent = 44,955.10

now replace rate with 21

PV of X when rate is 21 percent = 26,947.50

Investment Y:

FV = 0, PMT = 9300, rate = 7%, N = 5

use PV function in Excel

PV when rate is 7 percent = 38,131.84

now replace rate with 21

PV of Y when rate is 21 percent = 27,211.65

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.