You will be performing the analysis from the perspective of an investor who is 25 years from retirement and the investor's income is greater than living expenses.

The investor has a liquid net worth of $1,000,000 of which 40% is invested in the S&P 500 index, 40% in a medium-duration, high quality bond fund and 20% in a savings account earning 5% interest per year.

You are to determine if the investor should take $100,000 from the savings account and purchase $100,000 of Tesla's company stock. Considering Teslas stock price is at $185.77 USD as of today.

What is the...

NPV- Net present value?

IRR- Internal rate of return?

PBP- Payback period?

Required rate of return percent?

Amount not paid back yet ?

Estimated cash flows for the next 5 years are: 200, 800, 1,200, 1600, 1700

Show excel table, chart work

?

Annual Cash flow Single amounts terminal value Total Cash flows Amount not paid back yet NET PRESENT VALUE INTERNAL RATE OF RETURN PAY BACK PERIOD < ----- Required rate of return aka discount rate aka hurdle rate aka cost of capital

Transcribed Image Text:

Annual Cash flow Single amounts Total Cash flows Individual Present value SUM of PV less initial investment Net present value Amount not paid back yet NET PRESENT VALUE INTERNAL RATE OF RETURN PAY BACK PERIOD 0 1 2 3 4 5 Annual Cash flow Single amounts Total Cash flows Individual Present value SUM of PV less initial investment Net present value Amount not paid back yet NET PRESENT VALUE INTERNAL RATE OF RETURN PAY BACK PERIOD 0 1 2 3 4 5

Answer rating: 100% (QA)

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