Your consulting firm will produce cash flows of $190,000 this year, and you expect cash flows thereafter to keep pace with any increase in the general level of prices. The interest rate currently is 5.2%, and you anticipate inflation of about 1.2%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value
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- 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.).Honesty Company would like to borrow funds from Integrity Company. The risk-free rate is 5% and the current inflation is 1%. In the following year, the inflation is expected to grow to 2%. Honesty still finds that the 3% margin remains to be relevant.What is the interest rate that Integrity should impose to Honesty (round off your answer to two decimal places)?You invest in a company which expects to pay you the following amounts in return each year. Year 1: $1,100, Year 2: $2,100, Year 3: $1,600, Year 4: $2,100, and Year 5 $1,500. If an annual interest rate is 5 percent, what is the present value of this uneven cash flow stream? $7,883 $7,807 $7,563 $7,237
- Find the present worth sum of money that would be equivalent to the future amounts of $5000 in year 6 and $7000 in year 8 if the real interest rate is 10% per year and the inflation rate is 5% per year. Solve using the factors and their equations with (a) an inflation-adjusted rate, and (b) the real interest rate. Solve manually pleaseSuppose 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.uestion 1: Solve the following TVM problems using Excel formulas. You MUST use Excel formulas (FV or PV) to receive credit. ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? C. Suppose you invest $ 570 monthly. What is the future value of the investment in 29 29 years, if interest at + 5% is compounded monthly? 5 6 7 8 19 20 21 22 23 24 25 26 27 28 29 Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A 国 W X
- Consider the cash flow shown in the graph and assume that the interest rate is 10%. What is the value of X at to ensure that cash flow shown has a future value of $1,500,000? Answer to the closest dollar.Consider two secunitios that pay risk-free cash flows over the next two yoars and that have the current market prices shown here (Click on the following icon in order to copy its contents into a spreadshoet) Price Today $384 Cash Flow in Two Years Security Cash Flow in One Year B1 $400 B2 $344 $400 a. What is the no-arbitrage price of a secunty that pays cash flows of $400 in one year and $400 in two years? b. What is the no arbitrage price of a security that pays cash flows of $400 in one year and $2,800 in two yoars? c. Suppose a security with cash flows of $200 in one year and $400 in two years is trading for a price of $520 What arbitrage opportunity is available? a. What is the no-arbitrage price of a secunity that pays cash flows of S400 in ono yoar and $400 in two yoars? The no arbitrage price is s (Round to the nearest dollar) b. What is the no-arbitrage price of a security that pays cash flows of $400 in one yoar and $2,800 in two years? The no-arbitrage price is S (Round to…Suppose that a geometric gradient begins with $17,000 at the end of 3 years and increases by 12% every year thereafter for 9 years. If the interest rate given on this account is 20%, determine the present worth of the cash flows. Note: Do not use excel.
- Consider a loan of $10,000 and the following pattern of cash flows. a. What is the interest rate that makes the present worth equal to $0.00? b. Using the interest rate determined in part (a), and leaving the −$10,000 at year 0 in place, determine the equal annual incomes that are equivalent to the gradient series in years 1, 2, 3, and 4?Suppose an investor is considering the purchase of a financial instru- ment that promises to deliver the following semiannual cash flows: four payments of $40 every six months for two years and $1,000 delivered four semiannual periods from now. Suppose the price of this financial instrument is $982.0624. What yield is being offered by this financial instrument? Please explain in detail.3. The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 6.60%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate 6.60%, 4.13%, 2.25%, 9.31% Periodic rate 2.35%, 1.65%, 6.12%, 6.77% Effective annual rate 6.77%, 4.35%, 3.66%, 6.60% Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 6%. But the bank is compounding monthly. What is the effective interest rate that Rahul would pay for the loan? A. 6.027% B. 6.289% C. 6.168% D. 6.074%…