# Investment X offers to pay you $5,500 per year for 9 years, whereas Investment Y offers to pay...

## Question:

Investment X offers to pay you $5,500 per year for 9 years, whereas Investment Y offers to pay you $7,900 per year for 5 years. If the discount rate is 5 percent, what is the present value of these cash flows? If the discount rate is 15 percent, what is the present value of these cash flows?

## Computing for the Present Value of Cash Flows:

Present value is the current value of a future some of money computed using a specified rate of return. It is the amount that we will invest today to get the desired future amount. It is necessarily lower than the future amount as we take into account the time value of money. The value of money received today is worth more than the value received in the future as that amount can be invested and earn interest.

## Answer and Explanation: 1

Present value of cash flows is computed as: (Cashflow x (1-(1+i)^-n))/i

**Investment X**

*if discount rate is 5%:*

PV = (Cashflow x (1-(1+i)^-n))/i

PV = $5,500 x (1-(1.05)^(-9))/ 0.05

**PV = $39,093.02**

*if discount rate is 15%:*

PV = (Cashflow x (1-(1+i)^-n))/i

PV = $5,500 x (1-(1.15)^(-9))/ 0.15

**PV = $26,243.71**

**Investment Y**

*if discount rate is 5%:*

PV = (Cashflow x (1-(1+i)^-n))/i

PV = $7,900 x (1-(1.05)^(-9))/ 0.05

PV = $56,151.79

*if discount rate is 15%:*

PV = (Cashflow x (1-(1+i)^-n))/i

PV = $7,900 x (1-(1.15)^(-9))/ 0.15

**PV = $37,695.51**

#### Ask a question

Our experts can answer your tough homework and study questions.

Ask a question Ask a question#### Search Answers

#### Learn more about this topic:

from

Chapter 6 / Lesson 1The value of investments changes over time, and this can be applied to multiple cash flows. Identify how to calculate both the present and future values applied specifically to cash flows.

#### Related to this Question

- Investment X offers to pay you $4,900 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 3 percent, what is the present value of these ca
- Investment X offers to pay you $4,500 per year for 9 years, whereas Investment Y offers to pay you $6,200 per year for 5 years. If the discount rate is 7 percent, what is the present value of these c
- Investment X offers to pay you $5,300 per year for 9 years, whereas Investment Y offers to pay you $7,200 per year for 5 years. If the discount rate is 7 percent, what is the present value of these ca
- Investment X offers to pay you $5,000 per year for 9 years, whereas Investment Y offers to pay you $7,400 per year for 5 years. 1. If the discount rate is 5 percent, what is the present value of the
- Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you $7,200 per year for 5 years. a. If the discount rate is 4 percent, what is the present value of thes
- Investment X offers to pay you $5,100 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 6 percent, what is the present value of these ca
- Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,800 per year for 5 years. If the discount rate is 5 percent, what is the present value of these ca
- Investment X offers to pay you $6,000 per year for nine years, whereas Investment Y offers to pay you $8,000 per year for six years. If the discount rate is 5 percent, a) what is the present value o
- Investment X offers to pay you $4,900 per year for 9 years, whereas Investment Y offers to pay you $6,500 per year for 5 years. 1: (a) If the discount rate is 5 percent, what is the present value of
- Investment X offers to pay you $5,500 per year for 9 years, whereas Investment Y offers to pay you $8,000 per year for 5 years. A) If the discount rate is 8%, what is the present value of these cash f
- Investment X offers to pay you $7,700 per year for 9 years, whereas Investment Y offers to pay you $10,600 per year for 5 years. 1: (a) If the discount rate is 7 percent, what is the present value of
- a) Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,700 per year for 5 years. If the discount rate is 5 percent, what is the present value of these
- Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you $7,100 per year for 5 years. a) If the discount rate is 6 per cent, what is the present value of the
- Investment X offers to pay you $6,300 per year for 9 years, whereas Investment Y offers to pay you $9,000 per year for 5 years. Requirement 1: (a) If the discount rate is 8%, what is the present value
- Investment X offers to pay you $6,900 per year for 9 years, whereas Investment Y offers to pay you $9,300 per year for 5 years. Requirement: If the discount rate is 21 percent, what is the present v
- Investment X offers to pay you $6,000 per year, for 9 years, whereas Investment Y offers to pay you $8,200 per year, for 5 years. If the discount rate is 8%, what is the present value of these cash fl
- Investment X offers to pay you $5,300 per year for 9 years, whereas Investment Y offers to pay you $7,800 per year for 5 years. If the discount rate is 4%, what is the present value of these cash flow
- Investment X offers to pay you $4,500 per year for 9 years, whereas Investment Y offers to pay you $6,600 per year for 5 years. If the discount rate is 6%, what is the present value of these cash flow
- Investment X offers to pay you $5,000 per year for 9 years, whereas Investment Y offers to pay you $7,400 per year for 5 years. If the discount rate is 5%, what is the present value of these cash flow
- Investment X offers to pay you $6, 900 per year for 9 years. Whereas Investment Y offers to pay you $9, 300 per year for 5 years. If the discount rate is 7 percent, what is the present value of these cash flows?
- Investment X offers to pay you $4,400 per year for eight years, whereas Investment Y offers to pay you $6,500 per year for five years. a. Calculate the present value for Investment X and Y if the discount rate is 5 percent. (Do not round intermediate calc
- Investment X offers to pay you $7,300 per year for 9 years, whereas Investment Y offers to pay you $9,800 per year for 5 years. If the discount rate is 5 percent, what is the present value of these cash flows?
- Investment X offers to pay you $4,300 per year for 9 years, whereas Investment Y offers to pay you $6,100 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows?
- Investment X offers to pay you $7,300 per year for 9 years, whereas Investment Y offers to pay you $9,800 per year for 5 years. If the discount rate is 23 percent, what is the present value of these cash flows?
- Investment X offers to pay you $5,400 per year for seven years, whereas Investment Y offers to pay you $7,500 per year for four years. a. Calculate the present value for Investment X and Y if the discount rate is 6 percent. b. Calculate the present valu
- Investment P offers to pay you $5,500 per year for nine years, whereas Investment T offer to pay $8,000 per year for five years. Which of these cash flow streams has the higher present value a) if the discount rate is 55%? b) if the discount rates is 2
- Investment X offers to pay you $7,900 per year for 9 years, whereas Investment Y offers to pay you $10,800 per year for 5 years. A) If the discount rate is 8 percent, what is the present value of these cash flows? B) If the discount rate is 20 percent, wh
- Investment X offers to pay you $4,600 per year for 9 years, whereas Investment Y offers to pay you $6,700 per year for 5 years. If the discount rate is 4%, what is the present value of these cash flow
- Investment X offers to pay you $5,800 per year for 9 years, whereas Investment Y offers to pay you $8,600 per year for 5 years. If the discount rate is 5%, what is the present value of these cash flow
- Investment X offers to pay you $5,100 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 6%, what is the present value of these cash flow
- Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5%? If the discount rate is 15%?
- Investment X offers to pay you $6, 900 per year for 9 years. Whereas Investment Y offers to pay you $9, 300 per year for 5 years. If the discount rate is 21 percent, what is the present value of these cash flows? (Enter rounded answers as directed, but do
- An investment will pay $2,565 two years from now, $3,503 four years from now, and $3,683 five years from now. If the opportunity rate is 13.86 percent per year, what is the present value of this investment?
- Investment X offers to pay you $6,646 per year for 5 years. Calculate the present value for Investment X if the discount rate is 6 percent.
- An investment will pay you $300 a year for 8 years, (I.e., 8 payments), starting 4 years from today. What is the present value of the investment at a discount rate of 6%?
- Investment X offers to pay you $8,800 per year for 10 years, whereas Investment Y offers to pay you $12,000 per year for 7 years. Assuming 9% discount rate, what are the present values for these cash flows? Which one is more valuable?
- An investment will pay $1,628 two years from now, $3,158 four years from now, and $3,158 five years from now. If the opportunity rate is 9.80% per year, what is the present value of this investment?
- Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you $7,200 per year for 5 years. a. If the discount rate is 4 percent, what is the present value of these cash flows? (Do not round intermediate calculations an
- An investment will pay $500 in three years, $700 in five years and $1000 in nine years. If your opportunity rate is 6%, what is the present value of this investment?
- An investment will pay $400 in three years, $800 in five years, and $1,200 in nine years. If the opportunity rate is 8%, what is the present value of this investment?
- Investment X offers to pay you $4,400 per year for nine years, whereas Investment Y offers to pay you $6,500 per year for five years. Calculate the present value for Investments X and Y if the discou
- Investment X offers to pay you $4,600 per year for nine years, whereas Investment Y offers to pay you $6,700 per year for five years. Calculate the present value for Investments X and Y if the discoun
- Investment X offers to pay you $5,900 per year for 9 years, whereas Investment Y offers to pay you $8,700 per year for 5 years. A) If the discount rate is 4 percent, what is the present value of these cash flows? (Do not round intermediate calculations an
- Investment X offers to pay you $5,200 per year for eight years, whereas investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has a higher present value if th
- Investment X offers to pay you $6, 900 per year for 9 years. Whereas Investment Y offers to pay you $9, 300 per year for 5 years. Which of these cash flow streams has the higher present value at 7 percent?
- Investment X offers to pay you $6, 900 per year for 9 years. Whereas Investment Y offers to pay you $9, 300 per year for 5 years. Which of these cash flow streams has the higher present value at 21 percent?
- Investment X offers to pay you $3,400 per year for nine years, whereas Investment Y offers to pay you $5,200 per year for five years. a. Which of these cash flow streams has the higher present value i
- Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. a. Which of these cash flow streams has the higher present value
- You will receive $5,500 three years from now. The discount rate is 13 percent. a. What is the value of your investment two years from now? b. What is the value of your investment one year from now? c. What is the value of your investment today? d. Find th
- An investment will pay $1,351 two years from now, $2,973 four years from now, and $1,1303 five years from now. If the opportunity rate is 11.77% per year, what is the present value of this investment? Round answer to two decimal places
- An investment pays you $35,000 at the end of this year and $15,000 at the end of each of the four following years. What is the present value of this investment, given that the interest rate is 5% per year?
- An investment pays you $25,000 at the end of this year and $10,000 at the end of each of the four following years. What is the present value of this investment, given that the interest rate is 6% per year?
- You are offered an investment that will pay you a perpetuity of $1,000 per year forever. Its price is $39,600. What annual rate of return (discount rate) is implied in this value? a) 0.00% b) 2.53%
- An investment promises a payoff of $195 two and one-half years from today. At a discount rate of 7.5% per year, what is the present value of this investment?
- Investment X offers to pay Corry $4,700 per year for eight years, whereas Investment Y offers to pay her $6,700 per year for five years. Which of these cash flow streams has a higher present value i
- An investment pays you $20,000 at the end of this year and $ 10,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 5
- An investment pays you $20,000 at the end of this year, and $10,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 4
- An investment offers to pay you $10,000 a year for 5 years. If it costs $33,520, what will be your rate of return on the investment?
- Investment X offers to pay you $4,700 per year for nine years, whereas Investment Y offers to pay you $6,800 per year for five years. Calculate the present value for Investments X and Y if the discoun
- An investment pays you $30,000 at the end of this year, and $10,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 5% per year? A) $39,614 B) $63,382 C) $79,228 D) $95,074
- An investment promises to pay $3,500 per year for the next 3 years and then $4,000 per year for the following two years. Assume a discount rate of 15% per year, how much should you pay for this inves
- Investment X offers to pay you $3,700 every year for the next nine years, whereas investment Y offers to pay you $5,500 per year for the next five years. If the interest rate is 6%, which investment h
- Investment X offers to pay you $4,300 per year for 9 years, whereas Investment Y offers to pay you $6,100 per year for 5 years. Which of these cash flow streams has a higher present value if the disco
- You will receive $5,000 three years from now. The discount rate is 12%. a. What is the value of your investment two years from now? Multiply $5,000 x .893 (one year's discount rate at 12%). (Round you
- You will receive $8,800 three years from now. The discount rate is 10 percent. a What is the value of your investment two years from now? Multiply $8,800 x .909 (one year's discount rate at 10 percen
- You invested $1,200 three years ago. During the three years, you earned annual rates of return of 4.8%, 9.2%, and 11.6%. What is the value of this investment today?
- An investment costing $100,000 promises an after-tax cash flow of $36,000 per year for 6 years. a. Find the investment's net present value at a 15% discount rate. b. Find the investment's profitabili
- Determine the present value now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4 percent.
- Investment X offers to pay you $3,400 per year, for nine years, whereas Investment Y offers to pay you $5,200 per year, for five years. Which of these cash flow streams has the higher present value, i
- You will receive $5,000 three years from now. The discount rate is 8%. What is the value of your investment 2 years from now?
- If you were offered $7,177.50 9 years from now in return for an investment of $1,500 currently, what annual rate of interest would you earn if you took the offer?
- You are offered an investment that will pay you $235 in one year, $450 the next year, and $600 at the end of the third year. How much is this investment worth if the interest rate is 10%?
- You will receive $7,500 three years from now. The discount rate is 12 percent. What is the value of your investment one year from now?
- You will receive $5,000 three years from now. The discount rate is 8%. What is the value of your investment one year from now?
- You are told that if you invest $11,000 per year for 23 years (all payments made at the end of each year) you will have accumulated $366,000 at the end of the period. What annual rate of return is the investment offering?
- Your current investment will mature in 2 years for $30,000, at which time you will reinvest the funds for 10 more years at 7% per year. What will be the value of your investment at the end of the 12th year?
- An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11% annually, what is its present value? Its future value?
- An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 10% annually, what is its present value? Its future value?
- An investment will pay $100 at the end of each of the next 3 years, $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If other investments of equal risk earn 8% annually, what is its present value? Its future Value?
- An investment will pay $200 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and $700 at the end of Year 6. a. If other investments of equal risk earn 5% annually, what is their present value? b. What is its
- An investment will pay $150 at the end of each of the next 3 years, $250 at the end of year 4, $400 at the end of year 5, and $600 at the end of year 6. If other investments of equal risk earn 6% annually, what is its present value?
- An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6. a. If other investments of equal risk earn 6% annually, what is their present value? b. If other inves
- An investment will pay $50 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $550 at the end of Year 6. a. If other investments of equal risk earn 6% annually, what is its present value? Round the answer to
- You are being offered an investment that will pay you (and your heirs) $16,172 per year forever, starting 16 years from now. If your discount rate on this investment is 8.1 percent, how much would you be willing to pay for it today?
- You are being offered an investment that will pay you (and your heirs) $18,891 per year forever, starting 16 years from now. If your discount rate on this investment is 7 percent, how much would you be willing to pay for it today?
- You are being offered an investment that will pay you (and your heirs) $10,868 per year forever, starting 15 years from now. If your discount rate on this investment is 6.5 percent, how much would you
- Investment X offers to pay you $3,400 per year for 9 years, whereas Investment Y offers to pay you $5,200 per year for 5 years. Which of these cash flow streams has the higher percent value if the if
- An investment will pay $50 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. a. If other investments of equal risk earn 8% annually, what is its present value? b. If other invest
- An investment offers $3,600 per year for 11 years, with the first payment occurring one year from now. If the required return is 8 percent, the present value of the investment is ____.
- An investment offers $3,600 per year for 11 years, with the first payment occurring one year from now. If the payments occurred for 80 years, the present value of the investment would be ____.
- An investment offers $3,600 per year for 11 years, with the first payment occurring one year from now. If the payments occurred for 32 years, the present value of the investment would be _____.
- An investment will pay $600 at the end of each of the next 4 years, $500 at the end of Year 5, and $600 at the end of Year 6. What is its present value if other investments of equal risk earn 8 percent annually? a. $1,159.41 b. $2,705.67 c. $2,205.59
- An investment will pay $900 at the end of each of the next 4 years, $800 at the end of year 5, and $600 at the end of Year 6. What is its present value if other investments of equal risk earn 9 percent annually? a. $3,793.45 b. $2,981.34 c. $1,371.41
- An investment is expected to yield $300 in three years, $500 in five years, and $300 in seven years. What is the present value of this investment if the opportunity rate is 5%?
- An investment is expected to yield $300 in three years, $500 in five years, and $300 in seven years. What is the present value of this investment if our opportunity rate is 5%? a. $885 b. $864 c. $735 d. $900
- An investment is expected to yield $300 in three years, $500 in five years, and $300 in seven years. What is the present value of this investment if our opportunity rate is 5%? a. $735 b. $864 c. $885
- You are being offered an investment that will pay you (and your heirs) $16,964 per year forever, starting 11 years from now. If your discount rate on this investment is 8.6%, how much would you be wil
- Trum makes an investment today (year 0), and he expects to receive cash flows of $1640, $1563, and $3178, in years 1, 2 and 3, respectively. If the discount rate is 15%, what is the present value of
- We have an investment of $15,000 on which we receive $1,000 yearly, as well as $20,000 7 years later. Compute the interest rate on the investment.