Explore BrainMass

Explore BrainMass

    Financial Management

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. 1. Which of the following would be the best investment based on present value? Assume an annual discount rate of 16%

    a. An investment that pays $5,000 at the end of each year for 6 years, assuming annual compounding.
    b. An investment that pays $1,225 at the end of each quarter for 6 years, assuming quarterly compounding
    c. An investment that pays $1,200 at the beginning of each quarter 6 years, assuming quarterly compounding?
    d. $19,000 today.
    e. The answer cannot be determined from the information given.

    Year Undiscounted free cash flows
    0 (380,000)
    1 20,000
    2 30,000
    3 200,000
    4 175,000
    5 130,000
    6 145,000

    Required rate of return 15%

    © BrainMass Inc. brainmass.com May 24, 2023, 1:22 pm ad1c9bdddf

    Solution Preview

    Project a: Payment=5000, N=6, interest(discount) rate=16%
    <br>Compute present ...