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"Education is the most powerful weapon which you can use to change the world”
– Nelson Mandela

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Homework 2E

Homework 2E

Q 1.You are given an investment to analyze. The cash flows from this investment are End of year 1. $17,960 2. $2,220 3. $4,190 4. $20,500 5. $5,180 What is the present value of this investment if 5 percent per year is the appropriate discount rate? Round the answer to two decimal places. 2.You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 3.5 percent, compounded annually. End of year 1. $796 2. $2,361 3. $3,101 4. $4,328 What is the present value of this investment if 3.5 percent per year is the appropriate discount rate? Round the answer to two decimal places. 3.You have been offered the opportunity to invest in a project that will pay $3,671 per year at the end of years one through three and $13,381 per year at the end of years four and five. If the appropriate discount rate is 13.3 percent per year, what is the present value of this cash flow pattern? Round the answer to two decimal places.

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1. 43,661.91 2. 9,541.63