Calculating the present value of an investment

Reference no: EM13826594

Problem:

1. What is the present value (PV) of an investment that will pay $4000 in one year's time and $400 every year after that, when the interest rate is 5% per year?

A. $2400

B. $3600

C. $7200

D. $8000

2. You are considering investing in a zero-coupon bond that will pay you its face value of $1000 in ten years. If the bond is currently selling for $485.20, then the internal rate of return (IRR) for investing in this bond is closest to:

A. 12%

B. 8.0%

C. 7.5%

D. 10%

Summary of question:

These short questions belong to Finance. The 1st question is about calculating the present value of an investment. The 2nd question is about calculating the internal rate of return for a zero-coupon bond.

Reference no: EM13826594

Questions Cloud

Prepare a proposal for an online business : Prepare A Proposal For An Online Business

Remaining loan amount necessary to sell : A truck costing $112000 is paid off in monthly installments over four years with 8% APR. After three years the owner wishes to sell the truck. What is the closest amount from the following list that he needs to pay on his loan before he can sell h..

Marketing research paper on manager of a fortune : Marketing Research Paper On Manager Of A Fortune

Explain the nature and purpose of an enterprise systems : Discuss the advantages of functional structure of the traditional organization and the challenges that structure presents for the cross-functional nature of business processes. Explain the nature and purpose of an Enterprise Systems

Calculating the present value of an investment : What is the present value (PV) of an investment that will pay $4000 in one year's time and $400 every year after that, when the interest rate is 5% per year?

Discuss the theory of cost-benefit analysis : These problem belongs to Economics are about Cost Benefit Analysis, the steps involved in conducting Cost Benefit Analysis and the methods of calculating discount rate.

Which technique better aligns to your workplace : Compare and contrast project management and scenario planning techniques with particular emphasis on the implications of the techniques for the manager and the organization. Which technique better aligns to your workplace? Why

Discusses about possible way in which sales can be increased : discusses about the possible ways in which sales can be increased

Calculating the net present value received ten years : An investor can invest $1000 at the start of a certain year, then $1000 at the end of that year and the next year in a certain business. The business guarantees that the investor will receive a payment at the end of the year in five years. What is..

User Account

All Pages