Your investment over one year had a realized return of 8.65% and a dividend of $2.65. If
Question:
What is the dollar difference (on an absolute basis) in the present value of receiving $9,000 annually for seven years if you are comparing an ordinary annuity with an annuity due? Assume a discount rate of 8% per year.
A manufacturer of video games develops a new game over two years. This costs $850,000 immediately and a second amount of $850,000 at the end of Year 2. When the game is released, it is expected to make $1.2 million per year for three years after that (i.e. from Year 3 to Year 5). What is the net present value of this decision if the cost of capital is 10%?
You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $1,200 in Year 1, $2,350 in Year 2, and $8,975 in Year 5. What is the NPV of the opportunity if the cost of capital is 9% per year?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta