3. a. What is the value at the end of Year 3 of the following cash flow stream if interest is 10%, compounded semiannually? (Hint: You can use the EAR and treat the cash flows as an ordinary annuity) Show your solution. 2 6 Periods + 100 100 100 b. What is the PV? c. How much is the overstatement of your answer on letter b if you used the nominal rate, 10% to discount the payment stream rather than the EAR?
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- What is the equivalent uniform annual payment for the following cash flows if the interest rate is 10%? Populate the following table and compute the equivalent uniform annual payment. Show all work and provide an explanation. Do not use Excel. [Hint: This problem is a mix of annuity, gradient, and a single future cash flows.] ΕΟΥ Cash Flows Annuity Gradient Future 1 $2,000 2 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $14,000 IN 3 st 4 5 6 7. 8 9 10Please answer this question: What is the value at the end of Year 3 of the following cash flow stream if interest is 4% compounded semiannually? (Hint: you can use the EAR and treat the cash flows as an ordinary annuity or use the periodic rate and compound the cash flows individually.) What is the PV? What would be wrong with your answer to parts I(1) and I(2) if you used the nominal rate, 4%, rather than the EAR or the periodic rate, I sow /2=4%/2=2%, to solve the problems?May I ask for an explanation and solution to the question for a better understanding. Thank you! 5. What is the future value of a 5-year ordinary annuity with annual payments of P200, evaluated at a 7.5% semi-annual interest rate? a. P1,161.68 b. P1,348.48 c. P3,828.34 d. P287.13
- Suppose you are offered $7,100 today but must make the following payments: 1 2 Cash Flows ($) O $7,100 1-3,800 2-2,500 3 -1,600 4 -1,400 Year 4 6. 7 9. 10 11 What is the IRR of this offer? (Do not round intermediate calculations. Enter your ans 12 a. 13 14 15 16 17 b. If the appropriate discount rate is 10 percent, should you accept this offer? 18 19 multiple choice 1 20 21 Reject Ассept 22 23 24 25 C. If the appropriate discount rate is 19 percent, should you accept this offer? 26 27 multiple choice 2 28 29 Аcсept Reject 30 31 32 33 What is the NPV of the offer if the appropriate discount rate is 10 percent? (A negative ar What is the NPV of the offer if the appropriate discount rate is 19 percent? (A negative ar 34 d-1. 35 d-2. 36Q)You are given the future value of an annuity, A, the monthly payment, R, and the annual interest rate, r. Find the number of monthly payments, n. Round your answer to the nearest whole number if necessary.A = $4000; R = $70; r = 7% Solve it correctly not use excela. What is the present value of a 3-year annuity of $280 if the discount rate is 6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of the annuity in (a) if you have to wait an additional year for the first payment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
- 3. If you receive $98 each month for 12 months and the discount rate is 0.07, what is the present value? (show the process and can use financial calculator)Part B: Solve the following excersises: 1) Consider the following timeline where the firm requires the annuity to provide a minimum return of.....%. (write any number for interest rate): Project A End of Yoar -50,000 15,000 15,000 15,000 15,000 Calculate Future Value (FV) using two methods (Timeline and Equation) and compare the answers.Q.6. (a) The Rose Garden company will maintain a garden plot for you for a payment of OMR 75 now, followed by annual payments, in perpetuity, of OMR 50. How much would you have to put into an account which was to make these payments if the account guaranteed an interest rate of 10 per cent? Q.6. (b) What is the difference between annuity and perpetuity?
- For question 1 parts a,b,c below, show all work that justifies your results. You will show how to use series to compare values of payments over time with a lump sum payment today. The value of future payments in terms of today's dollars is known as the present value of those payments. 1. a. What is the present value formula if annual payments of C dollars continue indefinitely, assuming an average annual interest rate r? Write the answer as a series using summation notation b. Rewrite the summation formula found in part a. as a geometric series, and then find the sum. The answer will be a fraction containing C and r. c. For annuities with a present value of $1 million, calculate the annual payouts given over 25 years assuming interest rates of 1%, 5%, and 10%. Use the formula you obtained in part b. There are three answers- one for each rate, measured in dollars. Round each answer to the nearest cent.What is the equivalent uniform annual payment for the following investment if the interest rate is 10%? Populate the following table and compute the uniform annual payment. Show all work and provide a comment. [Hint: This problem is a mix of annuity, gradient, and a single future cash payment] ΕΟΥ Cash Flows 1 $4,000 2 $4,500 3 $5,000 4 $5,500 5 $6,000 60 $6,500 7 $7,000 00 8 $7,500 9 $8,000 10 $15,500 Annuity Gradient FutureUse the following time value of money tables for Questions 1-4. Round answers to the nearest dollar. (The annual interest rate for all problems is 6%.) n = 3; i = 6% n = 6; i = 3% Future value of 1 1.19102 1.19405 Present value of 1 .83962 .83748 Future value of an annuity 3.18360 6.46841 Present value of an annuity 2.67301 5.41719 Redlands Inc. deposited $3,000 into a savings account on January 1, 2020. The account earns annual interest. The amount in the savings account on December 31, 2022 is $Answer.