Please answer the attached questions. 12. Present Value and Multiple Cash Flows

Question

Please answer the attached questions.

12. Present Value and Multiple Cash Flows Investment X offers to pay you $3,900 per ear for nine years, whereas Investment Y vears. Which of these is 5 p offers to pay you $6,100 per year for five cash flow streams has the higher present value if the discount rate ercent? If the discount rate is 22 percent? 13. Calculating Annuity Present Value An investment offers $5,650 per year for 15 years, with the first payment occurring one year from now. If the required return is 8 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? Calculating Perpetuity Values an investment policy that will pay you and your heirs $12,000 per year forever. If the required return on this investment is 4.7 percent, how much will you pay for the policy? 14 The Perpetual Life Insurance Co. is trying to sell you Suppose the Perpetual Life Insurance Co. told you the policy costs $275,000. At what interest rate would this be a fair deal? 15. Calculating EAR Find the EAR in each of the following cases EAR APR Number of Times Compounded 67% 12.4 9.8 8.4 Quarterly Monthly Daily Infinite

Explanation / Answer

As per chegg guidelines we answer one question per post. Kindly post remaining questions in next post Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Investment X Investment Y Cash flows per year                3,900.00               6,100.00 PVF for 9 and 5 Years respectively at 5%                   7.1078                  4.3295 PV of cash flows             27,720.50            26,409.81 If discount rate is 22% Cash flows per year                3,900.00               6,100.00 PVF for 9 and 5 Years respectively at 22%                   3.7863                  2.8636 PV of cash flows             14,766.51            17,468.20 PVF at 5% PVF at 22%                                                                                 1.00                   0.9524                  0.8197                                                                                 2.00                   0.9070                  0.6719                                                                                 3.00                   0.8638                  0.5507                                                                                 4.00                   0.8227                  0.4514                                                                                 5.00                   0.7835                  0.3700                                                                                 6.00                   0.7462                  0.3033                                                                                 7.00                   0.7107                  0.2486                                                                                 8.00                   0.6768                  0.2038                                                                                 9.00                   0.6446                  0.1670 PVF factor for 9 Years                   7.1078                  3.7863 PVF factor for 5 Years                   4.3295                  2.8636

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