A firm has steady inflows and periodic outflows and wants to usethe Beranek model to manage its cash. Cash outflows occur onceper month; the amount of the next outflow is $2.16 million. It costs$200 to make an investment or a disinvestment. The yearly interestrate is 8 percent. Calculate:a. The optimal number of transactions.b. The amount of the periodic investments.c. The amount of the final withdrawal.d. The net profit from this strategy.

Beranek model : It is based upon the assumption that cash inflows are greater than cash outflows ,…

Answered: A firm has steady inflows and periodic…

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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Asap Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth of zero using MARR = 5.5%. The study period needs to be exactly 8 years and each year should have at least one unique cash-flow that is different from the cash-flows over the other years. Your answer should contain a table showing the cash-flows for each year and a graphical representation of the cash-flows (cash-flow diagram).
A process engineer plans on investing $5,000.00 now so that they may withdraw $500.00 a year for 12 years and still have $1,000.00 left in the account at the end of 12 years. a) Sketch the Cash Flow diagram. b) Write the equation for Present Worth of the cash flows in terms of the unknown rate of return. c) Calculate the rate of return on this investment using net present worth analysis techniques. (Hint: use linear interpolation).
Find the present values of the following cash flow streams. The appropriate interest rate is 6%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.) Year Cash Stream A Cash Stream B 1 $100 $300 2 400 400 3 400 400 4 400 400 5 300 100 Stream A $ $1,327.20 Stream B $ $1,366.43 What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent.…
Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth ofzero using MARR = 14.5%. The study period needs to be exactly 8 years and each year shouldhave at least one unique cash flow that is different from the cash flows over the other years. Youranswer should contain a table showing the cash flows for each year and a graphical representationof the cash flows (cash-flow diagram)
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SHOW COMPLETE SOLUTIONS. DRAW CASH FLOW DIAGRAMS. UNIFORM ARITHMETIC GRADIENT 1. Suppose an engineer receives an initial annual salary of P24,000 increasing at the rate of P1,200 a year. If money is worth12%, determine his annual salary for a period of 10 years.
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