4Consider a cash flow that lasts for ten years.the initial value A occurs at the third year, decreasing by 6% thereafter, what isthe value of A if the present equivalent for this series is $34,717, and the interestrate is 8% per yearout of

The time value of money becomes an important factor for capital budgeting decisions. It is an idea…

Answered: Consider a cash flow that lasts for ten…

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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Consider a cash flow that lasts for ten years. the initial value A occurs at the third year, decreasing by 6% thereafter, what is the value of A if the present equivalent for this series is $34,717, and the interest rate is 8% per year 5669.7 $/year 8454 $/year 40495.7 $/year 5000 $/year O 7247 $/year
Problem 6: Calculate the present values at t = 0 (now) of the following cash flows: a. $100 every year forever, with the first payment at t = 1 (t counts years), where the effective annual rate is .05 (i.e., 5%). b. $100 every year forever, with the first payment at t = 11 (t counts years), where the effective annual rate is .05 (i.e., 5%). Hint: What will be the value of this stream at t = 10 (ten years from now) if the discount rate remains 5%? To get the value at t = 0, discount this single value back 10 years at 5%. %3D
An investment offers to pay you $300 per quarter for 10 years. If the annual rate is 11% with quarterly compounding, then what is the present value of these cash flows? Answer N I PV PMT FV
A set of cash flows begins at $25,000 the first year, decreasing 10% each year until n = 10 years. If the interest rate is 4%, what is the present value?
If an initial investment of $1,000 is invested at 8% interest per year with semi-annual compounding, how much would be in the account after five years? A. $1,081.60 B. $1,061.66 C. $1,051.00 D. $1,281.60 The difference between the present and future worth of money at some time in the future is called A. Discount B. Deduction C. Inflation D. Depletion
What is the present worth of cash flows that begin at $10,000 and increase at 8% per year when N is 4 years? The interest rate is 6%.
Consider two streams of cash flows, A and B. Stream A is expected to have three cash[5]flows at the end of each year and stream B is expected to have six cash flows payable atthe end of each for six years. Stream A’s first cash flow is $10,600 and this amount isexpected to grow annually at 3%. Stream B’s $ cash flow is $6000 for each period.Suppose the annual effective rate of interest is 8%, which of the two streams of income would you prefer
For what interest rate will an uniform cash flow of $40,000 per year for 10 years, (t=1 to 10) be equivalent to a present worth of $294,404 ? 5% 4% 8% 6% 7%
1. What interest comp. monthly is equivalent to an interest rate of 14.5% comp. quarterly? 2. A sum of $145,000 is invested now and left for 8 years, at which time the principal is withdrawn. The interest that has accrued is left for another 8 years. If the interest rate is 5%, what will be the withdrawal amount at the end of the 16th year? 3. How long will it take for an investment to increase by 145% its amount if money is worth 14% comp. semi-annually? 4. A man makes a payment of $1450 at the beginning of every month on a bank that offers 6% interest. How much did the man borrow if the payment would last for 10 years? 5. A young woman made a loan from a certain bank and started paying $1450 quarterly after 2 years from the loan date. If payment is to be made for 5 years and interest is 10%, how much was loaned by the woman?
Please show in Excel Suppose that you deposit $200 at the end of each month into an account paying an expected annual rate of return of 3%, compounded monthly. How much money will you have in the account in 10 years? AnswerN I PV PMT FV
A set of cash flows begins at $15,000 the first year, with an increase each year until n = 12 years. If the interest rate is 8%, what is the present value when (a) the annual increase is $1000? (b) the annual increase is 8%?
A set of cash flows begins at $60,000 and increases at 10% per annum for the next 12 years. If the interest rate is 10%, what is the present value of the set (to the nearest dollar)? Choose one Answer : O A. $650,545 O B. $604,545 O C. $654,545.C O D. $654,045

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Consider a cash flow that lasts for ten years. the initial value A occurs at the third year, decreasing by 6% thereafter, what is the value of A if the present equivalent for this series is $34,717, and the interest rate is 8% per year