How much should you be willing to pay for this investment

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1. You are considering the purchase of an investment that would pay you $90 per year for Years 1-4, $82 per year for Years 5-7, and $27 per year for Years 8-10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then how much should you be willing to pay for this investment? Show your answer to the nearest $.01. Do not use the $ sign in your answer.

2. Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 9 percent to evaluate average-risk projects, and it adds or subtracts 1 percentage points to evaluate projects of more or less risk. Currently, two mutually exclusive projects are under consideration. Both have a cost of $ 391 and will last 4 years. Project A, a riskier-than-average project, will produce annual end of year cash flows of $ 101 . Project B, of less than average risk, will produce cash flows of $ 248 at the end of Years 3 and 4 only. To the nearest .01, list the NPV of the higher NPV project. Note, if the NPV is negative, place a - sign in front of your answer. Do not use the $ symbol.

Reference no: EM131892690

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