You are considering the purchase of an investment that would pay you $66 per year for...

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Finance

You are considering the purchase of an investment that would payyou $66 per year for Years 1-4, $45 per year for Years 5-7, and $98per year for Years 8-10. If you require a 14 percent rate ofreturn, and the cash flows occur at the end of each year, then howmuch should you be willing to pay for this investment? Show youranswer to the nearest $.01. Do not use the $ sign in youranswer.

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4.0 Ratings (774 Votes)

Ans 345.09

Year	Project Cash Flows (i)	DF@ 14%	DF@ 14% (ii)	PV of Project A ( (i) * (ii) )

1	66	1/((1+14%)^1)	0.877	57.89
2	66	1/((1+14%)^2)	0.769	50.78
3	66	1/((1+14%)^3)	0.675	44.55
4	66	1/((1+14%)^4)	0.592	39.08
5	45	1/((1+14%)^5)	0.519	23.37
6	45	1/((1+14%)^6)	0.456	20.50
7	45	1/((1+14%)^7)	0.400	17.98
8	98	1/((1+14%)^8)	0.351	34.35
9	98	1/((1+14%)^9)	0.308	30.14
10	98	1/((1+14%)^10)	0.270	26.43
		PV		345.09

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You are considering the purchase of an investment that would payyou $66 per year for Years 1-4, $45 per year for Years 5-7, and $98per year for Years 8-10. If you require a 14 percent rate ofreturn, and the cash flows occur at the end of each year, then howmuch should you be willing to pay for this investment? Show youranswer to the nearest $.01. Do not use the $ sign in youranswer.

You are considering the purchase of an investment that would pay you $66 per year for...

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