Your father paid $10,000 (CF at t = 0) for an investment that promises

QUESTION

Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $13,500 at the end of the 5th year. What is the expected rate of return on this investment?Answer a.15.23%b.10.46%c.12.39%d.12.91%e.
18) let k be rate of return. NPV = 0 = -10000 750*((1 k)^5-1)/(k*(1 k)^5) 13500/(1 k)^5 if k = 0.1291, RHS = 0.2348 very near to 0. if k = 0.1219, RHS = 286.52 Hence, (d), k = 0.1291 = 12.91% is the ANSWER. 19) let k be the quarterly rate of return, interest of each quarter = 10000*k = 320 ($) => k = 0.032 = 3.2%

fective annual rate = (1 0.032)^4-1 = 0.1343 = 13.43% Hence, option (d), 13.43 % is ANSWER. 20) let a = amount paid each year PV = 13000 = a*(1.09^4 1)/(0.09*1.09^4) = 4012.69 ($) Hence, option (a) is ANSWER>

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION