Paolo is considering purchasing a Sunlife Capitalinvestment. Paolo will receive P1,000 every three monthsfor the next two years if he purchases the investment. Hewould make the first P1,000 payment as soon as hepurchases the investment. How much should Paolo bewilling to pay for this investment if his required rate ofreturn is 16%? *P1,345.60P10,764.80P7,002.05P1,368.57

Maximum amount Paolo is willing to pay is present value of all future cash flows discounted at…

Answered: Paolo is considering purchasing a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment, Justine will receive P1,000 every three months for two years. The first P1,000 payment will be made as soon as she purchases the investment. If Justine's required rate of return is 16%, how much should she be willing to pay for this investment? a. P10,764.80 b. P7,002.05 c. P1,368.57 d. P1,345.60
Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment, Justine will receive P1,000 every three months for two years. The first P1,000 payment will be made as soon as she purchases the investment. If Justine's required rate of return is 16%, how much should she be willing to pay for this investment? a.P1,368.57 b.P10,764.80 c.P1,345.60 d.P7,002.05
May I ask for an explanation and solution to the question for a better understanding. Thank you! 12. Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment, Justine will receive P1,000 every three months for two years. The first P1,000 payment will be made as soon as she purchases the investment. If Justine's required rate of return is 16%, how much should she be willing to pay for this investment? a. P10,764.80 b. P7,002.05 c. P1,368.57 d. P1,345.60
Abhy is thinking about purchasing an investment from XYZ investments. If she buys the investment, Abhy will receive P100 every three months for five years. The first P100 payment will be made as soon as she purchases the investment. If Abhy's required rate of return is 16 percent, how much should she be willing to pay for this investment? * P1,519 O P1,310 O P1,413 P1,112 P1,359 What is the present value of P2,500 semiannual payments received at the beginning of each period for the next 10 years? The annual percentage rate is 6% O 37,194.70 38,309.50 O 35,809.50 O 36,884.80 None of the above Which of the following statements is CORRECT? * Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly. Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the…
Madison is thinking of buying an investment from PEP. If she purchases the investment, Madison will receive $1,000 every 3 months for 2 years. The first $1,000 payment will be made as soon as she buys the investment. If the required rate of return of Madison is 16%, what amount should she be willing to pay for this investment? a. 1,345.60 b. 7,002.05 c. 10,764.80 d. 1,368.57
Assume that you just inherited an annuity that will pay you $10,000 per year for10 years, with the first payment being made today. A friend of your mother offersto give you $60,000 for the annuity. If you sell it, what rate of return would yourmother’s friend earn on his investment? If you think a “fair” return would be 6%, howmuch should you ask for the annuity? (13.70%, $78,016.92)
You are planning to purchase a house for your son on his 21st birthday. He is now 11 years old. The house you will purchase for him will cost ¢300,000,000. You are thinking of two options. a.To deposit a lump sum which will grow to the amount required. b.To deposit each year a fixed amount to accumulate to the required amount. Required: If the interest rate is 15%, how much do you need for each option?
Jim Nance has been offered an investment that will pay him $860 three years from today. a. If his opportunity cost is 9% compounded annually, what value should he place on this opportunity today? b. What is the most he should pay to purchase this payment today? c. If Jim can purchase this investment for less than the amount calculated in part (a), what does that imply about the rate of return that he will earn on the investment?
Salvatore has the opportunity to invest in a scheme which will pay $5,000 at the end of each of the next 5 years. He must invest $10,000 at the start of the first year and an additional $10,000 at the end of the first year. What is the present value of this investment if the interest rate is 3%? A. −$5,907.57 B. −$3,189.80 C. $5,907.57 D. $3,189.80
Alfa Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $10,000 per year forever. If the guaranteed rate of return on this investment is 3.6 percent, how much will you pay for the policy? Can the excel and calculator solution be provided?
Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
John has an investment opportunity that promises to pay him $16,000 in four years. Suppose the opportunity requires John to invest $13,200 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What is the interest rate John would earn on this investment? (Round your interest rate to the nearest whole percentage.) Solve for i Present Value: n = i = Future Value:

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