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3 years ago

Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,400 per year for 5 years.

Business

1 answer:

Elanso [62]3 years ago

5 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Investment X offers to pay you $4,700 per year for 9 years

Investment Y offers to pay you $6,400 per year for 5 years.

Requirement 1:

First, we need to calculate the final value, using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

Investment X:

FV= {4,700*[(1.08^9)-1]} / 0.08

FV= $58,691.52

Investment Y:

FV= {6,400*[(1.08^5)-1]} / 0.08

FV= $37,546.25

Now, the present value:

PV= FV/(1+i)^n

Investment X:

PV= 58,691.52/(1.08^9)

PV= $29,360.37

Investment Y:

PV= 37,546.25/(1.08^5)

PV= $25,553.35

Investment X provides the higher present value, therefore, it should be the one to choose.

Requirement 2:

First, we need to calculate the final value, using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

Investment X:

FV= {4,700*[(1.20^9)-1]} / 0.20

FV= $97,754.84

Investment Y:

FV= {6,400*[(1.20^5)-1]} / 0.20

FV= $47,626.24

Now, the present value:

PV= FV/(1+i)^n

Investment X:

PV= 97,754.84/(1.20^9)

PV= $18,945.54

Investment Y:

PV= 47,626.24/(1.20^5)

PV= $19,139.92

Investment Y provides the higher present value, therefore, it should be the one to choose.

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Explanation:

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A.)

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g(x) = 16.25

B.)

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g(f(x))

Here g(x) takes in the result of f(x) ;

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