13. The following problems address issues related to present value. a. A customer will pay $200...

 

Transcribed Image Text:

13. The following problems address issues related to present value. a. A customer will pay $200 per quarter at the beginning of each quarter to her Internet provider for the next 7 years. Determine the net present value of these payments if the annual discount rate is 7.5%. b. If today is July 14, 2014, and the cost of capital r = 8%, what is the net present value of the following cash flows as of July 14, 2014: $-1,500 $ +800 $ +1500 $ +975 $ +885 $ +925 09/25/14 07/08/15 08/22/16 04/14/17 10/18/18 12/09/19 13. The following problems address issues related to present value. a. A customer will pay $200 per quarter at the beginning of each quarter to her Internet provider for the next 7 years. Determine the net present value of these payments if the annual discount rate is 7.5%. b. If today is July 14, 2014, and the cost of capital r = 8%, what is the net present value of the following cash flows as of July 14, 2014: $-1,500 $ +800 $ +1500 $ +975 $ +885 $ +925 09/25/14 07/08/15 08/22/16 04/14/17 10/18/18 12/09/19

Answer rating: 100% (QA)

a To determine the net present value NPV of the payments we need to calculate the present value PV of each payment and then sum them up The formula to ... View the full answer