Calculate the present value of the income streams A to E in Table 1 at an...
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Calculate the present value of the income streams A to E in Table 1 at an interest rate of 7 percent and again at an interest rate of 13 percent. End of Year 1 2 3 4 Would you buy the machine if the interest rate were 13 percent? 5 6 7 A $80 80 80 80 1,080 0 0 B $80 80 80 80 80 80 1,080 C $100 100 1,100 0 0 0 0 D $100 100 100 100 100 1.100 0 E $500 300 400 300 0 0 0 (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) The present value of income stream A at an interest rate of 7 percent is $ The present value of income stream B at an interest rate of 7 percent is $ The present value of income stream C at an interest rate of 7 percent is $ The present value of income stream D at an interest rate of 7 percent is $ The present value of income stream E at an interest rate of 7 percent is $ The present value of income stream A at an interest rate of 13 percent is $ The present value of income stream B at an interest rate of 13 percent is $ The present value of income stream C at an interest rate of 13 percent is $ The present value of income stream D at an interest rate of 13 percent is $ The present value of income stream E at an interest rate of 13 percent is $ Suppose the investment behind the flow of income in E is a machine that costs $1,210 at the beginning of year 1.Would you buy the machine if the interest rate were 7 percent? (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) Calculate the present value of the income streams A to E in Table 1 at an interest rate of 7 percent and again at an interest rate of 13 percent. End of Year 1 2 3 4 Would you buy the machine if the interest rate were 13 percent? 5 6 7 A $80 80 80 80 1,080 0 0 B $80 80 80 80 80 80 1,080 C $100 100 1,100 0 0 0 0 D $100 100 100 100 100 1.100 0 E $500 300 400 300 0 0 0 (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) The present value of income stream A at an interest rate of 7 percent is $ The present value of income stream B at an interest rate of 7 percent is $ The present value of income stream C at an interest rate of 7 percent is $ The present value of income stream D at an interest rate of 7 percent is $ The present value of income stream E at an interest rate of 7 percent is $ The present value of income stream A at an interest rate of 13 percent is $ The present value of income stream B at an interest rate of 13 percent is $ The present value of income stream C at an interest rate of 13 percent is $ The present value of income stream D at an interest rate of 13 percent is $ The present value of income stream E at an interest rate of 13 percent is $ Suppose the investment behind the flow of income in E is a machine that costs $1,210 at the beginning of year 1.Would you buy the machine if the interest rate were 7 percent? (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.) (Enter your response rounded to two decimal places.)
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Answer rating: 100% (QA)
To calculate the present value of the income streams at different interest rates we can use the present value formula PV CF 1 rn Where PV is the prese... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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