7. There are two possible investments A and B. Their case flows are shown in the...
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7. There are two possible investments A and B. Their case flows are shown in the table below. Illustrate these cash flows over 12 months in two cash flow diagrams. Show only the net cash flow in each period. (6 marks, 3 each) Outflow Inflow Investment A $24000 now, $1200 each quarter, and a closing fee of $2400 at the end of month 12. $8000 monthly at the end of each month. $8500 at the end of the first month, and from that point on, $500 more than the previous month. 8. DecryptCo has $50,000 to invest in a bank account. How long will it take (years) the amount in a bank account to double itself under the following circumstances? (a) (b) 4% nominal annual, compounded quarterly interest rate? (2 marks) 3.85% nominal annual, compounded monthly interest rate? (2 marks) 4.2% nominal annual, compounded semi-annually interest rate? (2 marks) 3.8% nominal annual, compounded continuously? (2 marks) (c) (d) Investment B $4500 every two months, starting two months from now, $3000 each quarter. 7. There are two possible investments A and B. Their case flows are shown in the table below. Illustrate these cash flows over 12 months in two cash flow diagrams. Show only the net cash flow in each period. (6 marks, 3 each) Outflow Inflow Investment A $24000 now, $1200 each quarter, and a closing fee of $2400 at the end of month 12. $8000 monthly at the end of each month. $8500 at the end of the first month, and from that point on, $500 more than the previous month. 8. DecryptCo has $50,000 to invest in a bank account. How long will it take (years) the amount in a bank account to double itself under the following circumstances? (a) (b) 4% nominal annual, compounded quarterly interest rate? (2 marks) 3.85% nominal annual, compounded monthly interest rate? (2 marks) 4.2% nominal annual, compounded semi-annually interest rate? (2 marks) 3.8% nominal annual, compounded continuously? (2 marks) (c) (d) Investment B $4500 every two months, starting two months from now, $3000 each quarter.
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Related Book For
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
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