The question on problem number 5 seems to stem from a question on the number of years but only given 10 periods and the number of compounding periods per year. This is easily determined by dividing the number of periods by the compounding periods per year. For example, with monthly periods and 30 total cash flows, the number of years is (30 / 12 = 2.5) 2.5 years. Fractional years are totally acceptable.
And after that, this was provided:
We finally have a handle on problem 5 on the Word document. The number of years for both options is 4. These questions correspond to problems 10 and 11 on the online assignment portion. So, again, the number of years is 4.
FYI - I submitted this assignment previously and it was returned to me with large percentages for the math problems (around 25%/over $10,000) with all answers as "none of the above." I spoke with the professor and he indicated that all of the answers are NOT "none of the above." He said it may be an answer but not for all of them.
Consider cash flows that have multiple periods per year. Option 1 has quarterly periods and Option 2 has semi-annual periods. If you invest $10,000 today in each option and each option pays out $2,800 total per year, what are the following values given a required annual rate of 5%?
a. IRR of Option 1
A. 1.00% - 1.99%
B. 2.00% - 2.99%
C. 3.00% - 3.99%
D. 4.00% - 4.99%
E. 5.00% - 5.99%
F. None of the above.
b. IRR of Option 2
A. 1.00% - 1.99%
B. 2.00% - 2.99%
C. 3.00% - 3.99%
D. 4.00% - 4.99%
E. 5.00% - 5.99%
F. None of the above.
c. NPV of Option 1
A. $0 - $24
B. $25 - $49
C. $50 - $74
D. $75 - $99
E. $100 - $124
F. None of the above.
d. NPV of Option 2
A. $0 - $24
B. $25 - $49
C. $50 - $74
D. $75 - $99
E. $100 - $124
F. None of the above.
e. Would it preferable to receive daily payments rather than quarterly or semi-annually?
A. Daily is preferred
B. Semi-annually is preferred
C. Monthly is preferred
D. Quarterly is preferred
E. Annually is preferred