Suppose opportunity interest rate is 8 find the present

Reference no: EM13396044

A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.

Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

a. Assuming the opportunity interest rate is 8%, what is the present value of the second alternative mentioned above? Which of the two alternatives should be chosen and why?

b. How would your decision change if the opportunity interest rate is 12%?

c. Provide a description of a scenario where this kind of decision between two types of payment streams applies in the "real-world" business setting.

Reference no: EM13396044

Questions Cloud

Identify any considerations you will need to employ to : select a current product with which you are familiar and pitch a new integrated marketing communication plan imc to

Compensation and benefits due week 10 and worth 200 points : compensation and benefits due week 10 and worth 200 points assuming the same role of hr vp as in the previous

The owner of a small hardware store ndash the only one in a : the owner of a small hardware store ndash the only one in a medium-sized town in the mountains ndash has just learned

Do you think there are differences between the clone and a : in 2008 the food and drug administration fda approved food derived from cloned animals. in addition these products will

Suppose opportunity interest rate is 8 find the present : a generous university benefactor has agreed to donate a large amount of money for student scholarships. the money can

Mcdougal printing inc had sales totaling 40000000 in fiscal : 1.josh smith has compiled some of his personal financial data in order to determine his liquidity position. the data

Write down some of the examples of biotechnology that have : biotechnology is the use of a living thing or any part of a living thing to make a product or process that improves

Find the first action you would take as president as : assume that the country is in a period of high unemployment interest rates are at almost zero inflation is about 2

Discuss the market segmentation within that industry along : write a white paper on a company of your choice and discuss the market segmentation within that industry along with the

User Account

All Pages