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Explain the percent discount rate

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Your grandmother gives you $50,000 to be invested in one of three opportunities: real estate, regular bonds, or zero coupon bonds.  If you invest the entire $50,000 in one of these opportunities with the expected cash flows shown below, which investment offers the highest NPV? Assume for simplicity that an 8 percent discount rate is appropriate for all three investments. Use only excel to solve?

 

Year 1

Year 2

Year 3

Year 4

Year 5

Real Estate

$3,400 

$3,400 

$3,400 

$1,700 

$63,400 

Bond

$6,000 

$6,000 

$6,000 

$6,000 

$56,000 

Zero Coupon

$0 

$0 

$0 

$0 

$85,000 

Reference no: EM133122804

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