2. 3. 4. Calculate the present value of payments of RM5,000 per year for 4 years...

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2. 3. 4. Calculate the present value of payments of RM5,000 per year for 4 years if the first payment starts at end of the 4th year given annual interest rate of 10%. How much should you pay for an investment that will pay you a dividend of RM750 for every quarter indefinitely if money is worth 12% per annum compounded quarterly for the following scenarios: i. ii. Just after the dividend has been paid Just before the dividend is due to be paid City University would like to set up a scholarship that pays outstanding students RM10,000 in tuition fees. Given the cost of capital is 10% and the university expect the scholarship to last forever, how much should be set aside today if the scholarship is expected to start in 5 years time? Calculate the NPV of a RM3,000 initial investment that is expected to generate a cash flow of RM700 at constant prices, at the end of each year for 3 years. Assume the nominal cost of capital is 15% per annum and inflation rate is 8% per annum. Should you proceed with the investment? 2. 3. 4. Calculate the present value of payments of RM5,000 per year for 4 years if the first payment starts at end of the 4th year given annual interest rate of 10%. How much should you pay for an investment that will pay you a dividend of RM750 for every quarter indefinitely if money is worth 12% per annum compounded quarterly for the following scenarios: i. ii. Just after the dividend has been paid Just before the dividend is due to be paid City University would like to set up a scholarship that pays outstanding students RM10,000 in tuition fees. Given the cost of capital is 10% and the university expect the scholarship to last forever, how much should be set aside today if the scholarship is expected to start in 5 years time? Calculate the NPV of a RM3,000 initial investment that is expected to generate a cash flow of RM700 at constant prices, at the end of each year for 3 years. Assume the nominal cost of capital is 15% per annum and inflation rate is 8% per annum. Should you proceed with the investment?

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SOLUTION 1 To calculate the present value of payments of RM5000 per year for 4 years if the first payment starts at the end of the 4th year we can use ... View the full answer