Maximum price for the investment

Reference no: EM1339301

An investment promises to pay $6,000 at the end of each year for the next five years and $4,000 at the end of each year for years 6 through 10.

a. If you require a 12 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?

b. Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 12 percent required rate of return?

Reference no: EM1339301

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