Jim Nance has been offered an investment that will pay him $500 three years from today.

| November 13, 2015

P5-13

Time value Jim Nance has been offered an investment that will pay him $500 three years from today. 

 

  1. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today?

 

  1. What is the most he should pay to purchase this payment today?

 

  1. 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?

 

 

 P5-30

 

Value of mixed streams Find the present value of the streams of cash flows shown in the following table. Assume that the firm’s opportunity cost is 12%. Please show your work.

A                                 B                                            C

 

Year Cash flow     Year   Cash flow                 Year       Cash flow

 

1 -$2,000                1       $10,000                      1-5      $10,000/yr

 

2 3,000                   2-5   5,000/yr                      6-10    8,000/yr

 

3 4,000                   6        7,000

 

4 6,000

5 8,000

Get a 5 % discount on an order above $ 150
Use the following coupon code :
2018DISC
FIU FIN4486 EXAM 1 38092
JWMI 530 Financial management ASSIGNMENT 3 - Management Accounting Case: West Island Products 62933

Category: Homework Help

Our Services:
Order a customized paper today!