A) Investment X offers to pay you $5000 per year for eight years, whereas Investment Y offers to pay you $6000 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 6 per cent? If the discount rate is 10 per cent? (10 marks)

B) Indooroopilly Bank charges 14 per cent compounded monthly on its business loans. Indy United Bank charges 14 per cent compounded semiannually. As a potential borrower, which bank would you go to for a new loan?

Answer rating: 100% (QA)

Investment Analysis A Present Value of Investments We can calculate the present value of each invest... View the full answer