Task: Let time be counted in years. Consider an investor who leases a machine for 3 years. At time t = 1 the investor ha

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 1 (61.63 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 2 (8.64 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 3 (8.48 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 4 (11.72 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 5 (5.47 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 6 (5.02 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 7 (7.54 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 8 (7.64 KiB) Viewed 81 times

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Task Let Time Be Counted In Years Consider An Investor Who Leases A Machine For 3 Years At Time T 1 The Investor Ha 10 (9.76 KiB) Viewed 81 times

Task: Let time be counted in years. Consider an investor who leases a machine for 3 years. At time t = 1 the investor has to pay the lease L in advance for the whole period. At t = 1 he also has a cost My to modify the machine for his purposes. At t = 3 there is a further cost M2 to remove all the modifications. The income I generated from operating the machine is received at t = 2. There is no income in the first and last year due to the modification of the machine. (i) For both of the following investments write down the equation of value in terms of the interest rate i per annum: cash flows of investment L M1 1 M2 time 1 2 3 4 investment 51,000 9,000 69,000 6,000 A investment 51,000 9,000 69,000 12,000 B (ii) What information (if any) about the roots is provided by the criterion with cumulative amounts above? In each case find all the roots of the equations of value. Answer: (i) Let amounts be counted in £'000s. The equations of value are
[Select] < 1 and [Select] 2 (ii) The criterion (Select] because the acumulated cash flows [Select] and [Select] respectively. The roots are [ Select] 6 for investment A and [Select] for investment B. This is [Select] 8 with the statement of the criterion. In particular [Select] 9
[Select] [Select] -(51 +9) i^2 + 69 1 - 6 = 0, -(51 + 9) (1 + i)^2 + 69 (1 + i) - 6 = 0, -(51 + 9) (1 + i^2)+ 69 (1 + i) - 6 = 0, STRICT
[Select] [Select ] -(51 +9) i^2 + 69 i - 12 = 0. -(51 +9) (1 + i)^2 + 69 (1 + i) - 12 = 0, -(51 +9) (1 + i^2) + 69 (1 + i) - 12 = 0,
[Select] because the [Select] does not apply to either scenario applies to the first scenario, but not to the second applies not to the first scenario, but to the second applies to both scenarios
[Select] [ Select] (-60.9.3) (-60, 69,-6) (3, 63, -6)
[Select] Select] (-60.9.-3) (-60, 69.-12) (-3, 57, -12)
[Select] [Select ] 0.0947657 and 1.05523 -0.905234 and 0.0552343 -0.0419481 and 1.19195
Select ] [Select ] 0.213579 and 0.936421 -0.786421 and -0.0635792 0.0452595 and 1.10474
✓ < Select] [Select ] consistent inconsistent
Select] [ Select ] these investments have both no yield only investment A has a yield only investment B has a yield these investments have both a yield