Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, assume that a sculpture was sold at an auction for a price of $10,231,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,377,500.

1) Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, assume that a sculpture was sold at an auction for a price of $10,231,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,377,500.

Required:
What was his annual rate of return on this sculpture? (Do not include the percent sign (%). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

2) Investment X offers to pay you $4,600 per year for 8 years, whereas Investment Y offers to pay you $8,400 per year for 5 years.

Required:
(a) Compute the present value for the above cash flow streams if the discount rate is 6 percent. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
Investment X:
Investment Y:

(b) Compute the present value for the above cash flow streams if the discount rate is 19 percent. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
Investment X:
Investment Y:

3) The Robb Computer Corporation is trying to choose between the following two mutually exclusive design projects:

Year Cash Flow (I) Cash Flow (II)
0 -$ 55,000 -$ 16,100
1 32,000 9,700
2 32,000 9,700
3 32,000 9,700

Requirement 1:
(a) If the required return is 7 percent, what is the profitability index for each project? (Round your answers to 3 decimal places. (e.g., 32.161))
Project I:
Project II:

(b) Which project should the firm accept according to the profitability index?

Requirement 2:
(a) Calculate the NPV for each project assuming a required return of 7 percent. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
Project I:
Project II:
(b) Which project should it take according to the NPV?

4)
An investment project costs $13,100 and has annual cash flows of $3,000 for 6 years. (Enter 0 when there is no payback period. Round your answers to 2 decimal places. (e.g., 32.16))
Required:
(a) What is the discounted payback period if the discount rate is 0 percent?
(b) What is the discounted payback period if the discount rate is 6 percent?
(c) What is the discounted payback period if the discount rate is 21 percent?

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