Suppose there is an investment project with the following cash flows to be received at the...

      

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Suppose there is an investment project with the following cash flows to be received at the end of next three years. The interest rate is 8 percent. Cash Flow ($) 5,000 20,000 33,000 a. What is the value of these cash flows at the end of Year 3? Year 1 2 3 b. What is the value of these cash flows today (today is Year 0)? (3 marks) (3 marks) An investment guarantees that you can receive back $30,000 six years later by investing $10,000 today. What interest rate do you earn if the rate is compounded semi-annually? (3 marks) Suppose there is an investment project with the following cash flows to be received at the end of next three years. The interest rate is 8 percent. Cash Flow ($) 5,000 20,000 33,000 a. What is the value of these cash flows at the end of Year 3? Year 1 2 3 b. What is the value of these cash flows today (today is Year 0)? (3 marks) (3 marks) An investment guarantees that you can receive back $30,000 six years later by investing $10,000 today. What interest rate do you earn if the rate is compounded semi-annually? (3 marks)

Answer rating: 100% (QA)

a To find the value of the cash flows at the end of Year 3 we can use the future value formula FV CF... View the full answer