Answer:
2865.09
Explanation:
V0 = #Shares * Price per Share
V0 = 100 * 25.8 = 2580
V1 = Today´s Value
V1 = 2865
Return Year 1 = (V1 - V0) / V0
Return Year 1 = (2865 - 2580)/2580
Return Year 1 = 11.05%
New Investment
Abby's desire is to get the same return of 11.05%. So for the next year her investment should be 2580 * (1 + return) --> 2580 * (1 + 0.1105) = 2865.09.
Remember that we are assuming that the 50 are part of the purchase price and we are assuming that she did not add any money.
Answer:
Year Cashflow [email protected]% PV
$ $
0 (40,000) 1 (40,000)
1 12,000 0.9259 11,111
2 12,000 0.8573 10,288
3 12,000 0.7938 9,526
4 16,000 0.7350 <u>11,760</u>
NPV <u> 2,685</u>
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Explanation:
Net present value is the difference between present value of cash inflows and initial outlay. The present value of cash inflows were obtained by multiplying the cash inflows by discount factors. The discount factors were calculated using the formula (1 + r)-n, where n represents number of years and r denotes discount rate.
