Chrome - Module 5 Practice Capital Decisions (Question 3) Lyryx Learning IncModule 5 Practice: Capital Decisions(Question 3)Name: Miguel ArdilaDate: 2024−04−1417:23Question 3 [7 points]Stefan has received three offers to purchase his used combine. Farmer A has offered him $162,000 today and $98,000 three years from now. Farmer B has offered him $47,000 today and $36,000 every six months for three years. Farmer C has offered him four annual payments of $68,300 starting today. The prevailing interest rates are 8.75% compounded annually. For full marks your answer(s) should be rounded to the nearest dollar.a) Calculate the NPV of the offer from Farmer A.NPV=$255,975.00b) Calculate the NPV of the offer from Farmer B. NPV =$0.00c) Calculate the NPV of the offer from Farmer C.NPV=$0.00d) Which offer should Stefan accept?Stefan should accept the offer from (select one).Marking:a) Your answer was: $255,975The correct answer was: $238,197The periodic rate is computed by dividing the nominal rate by the number of compounding periods per year, so a 7 co:
Q. Chrome - Module 5 Practice Capital Decisions (Question 3) Lyryx Learning IncModule 5 Practice: Capital Decisions(Question 3)Name: Miguel ArdilaDate: 2024−04−1417:23Question 3 [7 points]Stefan has received three offers to purchase his used combine. Farmer A has offered him $162,000 today and $98,000 three years from now. Farmer B has offered him $47,000 today and $36,000 every six months for three years. Farmer C has offered him four annual payments of $68,300 starting today. The prevailing interest rates are 8.75% compounded annually. For full marks your answer(s) should be rounded to the nearest dollar.a) Calculate the NPV of the offer from Farmer A.NPV=$255,975.00b) Calculate the NPV of the offer from Farmer B. NPV =$0.00c) Calculate the NPV of the offer from Farmer C.NPV=$0.00d) Which offer should Stefan accept?Stefan should accept the offer from (select one).Marking:a) Your answer was: $255,975The correct answer was: $238,197The periodic rate is computed by dividing the nominal rate by the number of compounding periods per year, so a 7 co:
Calculate Present Value: Now, let's do the calculation for the present value of the $98,000.PV=(1+0.0875)3$98,000PV=(1.0875)3$98,000PV=1.2877$98,000PV=$76,123.45
Calculate Total NPV: Next, we add the present value of the $98,000 received in 3 years to the $162,000 received today to get the total NPV for Farmer A.NPV=$162,000+$76,123.45NPV=$238,123.45
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