1. The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM 2 3 4 5 $100 $200 $200 $300 $300 X 600 Y 1,200 200 500 300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.

1. The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM 2 3 4 5 $100 $200 $200 $300 $300 X 600 Y 1,200 200 500 300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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At the 6 percent discount rate what will be the present value of the two-period stream of cash flows? (NCF=$200)
What is the present value of the following cash-flow stream if the interest rate is 4%? Year 1: $170; 2: $370; 3:$270
1. The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM 1 2 3 4 $100 $200 $200 $300 $300 600 Y 1,200 200 500 300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent. 2. Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7 percent annual rate, compounded semiannually. Under the second plan she would deposit $1,000 every year with a rate of interest of 7.5 percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with Plan 2, one year hence. a. What is the future (terminal) value of the first plan at the end of 10 years? b. What is the future (terminal) value of the second plan at the end of 10 years?
1. The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM 1 2 3 4 w $100 $200 $200 $300 $300 600 Y 1,200 z 200 500 300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent. 2. Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7 percent annual rate, compounded semiannually. Under the second plan she would deposit $1,000 every year with a rate of interest of 7.5 percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with Plan 2, one year hence. a. What is the future (terminal) value of the first plan at the end of 10 years? b. What is the future (terminal) value of the second plan at the end of 10 years?
Suppose you are given the following cash flow stream. If the interest rate is 20 percent, what is the future value of this cash flow stream at the end of Year 3? Year CF 10 $0 1 $344 2 $314 3 $290 Enter your answer rounded off to two decimal places. Do not enter $ in the answer box.
1. Draw a cash flow diagram showing payments of S6000 now, $2500 two years from now and $4500 six years from now. Interest rate is 9% per year. For the given cash flows find the: a) Total present worth equivalent. b) Total future worth equivalent. and c) Equivalent annual worth (uniform series) from year 1 to 6.
What is the present value of the following cash flows, if the discount rate is 10% annually? Beginning Cash Flow of Year P2,500 2,750 3,000 3,250 3,500 123 45
Find the annual worth (AW) that is equivalent to the following cash flow diagram, if the interest rate is 8% per year. 2 3 4. 6. 7. Time (year) 3000 4000 5000 0. 2000 Cash flow ($) Answer:
What is the present value of the following stream of cash flows if the discount rate is 9%? Year 1-5: $14,000 inflow Years 6-20: $23,000 inflow (Use the present value tables in your course packet for any present value calculations. Round your final answer to the nearest dollar.)
Suppose you would get OMR 5000at the end of 6 years and OMR 6700 at the end of 10 years. Calculate present value of both the cash inflows using 7.05% discount rate. .a 6500. b. 6700 C 671244 d. 2710.40
Consider the following cash flows: Year Cash Flow 2 $ 22,900 3 40,900 5 58,900 Assume an interest rate of 9.7 percent per year. a. If today is Year 0, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year 0, what is the future value of the cash flows ten years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
For the cash flows shown, determine the equivalent future worth in year 10 at an interest rate of 2.5% per month. Year 2 3 5 7 8 10 Cash Inflows, 250 250 250 250 250 250 250 250 250 (a) The compounding period is: (a) The payment period is: (c) The effective interest rate per compounding period is: (d) The effective interest rate per payment period is: (e) The general equation (without numbers) for calculating the equivalent future worth is: (f) After plugging in the numbers, the equation for calculating the equivalent future worth is (calculation is NOT required): 6, 6. 4)

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