A payment stream consists of a payment of $1600 today, a payment of $2400 in 3 months, and a payment of$2600 in 21 months. What is the fair market value of this payment stream 18 months from today? Assume acompound interest rate of 6.5% compounded quarterly.Today+$1600FV1 = $PV3 = $Start by calculating the following values on the time diagram:FV2 = $3 MonthsThe fair market value of this payment stream is:Total = $Time Value of Money Solver$2400Enter the given values.0N: =0Number of Payment Periods1:% =0Annual Interest Rate as a PercentPV: =Present ValuePMT: = 0PaymentFV: =Future ValueP/Y:012 VPayments per YearC/Y:12 VCompounding Periods per YearPMT: = END€SolveSolveSolveSolve18 MonthsSolveFV2FV1+ PV3Total21 Months$2600

According to the money's time value theory, cash is worth more now than it will be later. A future…

Answered: A payment stream consists of a payment…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 8MC: Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future...

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Given an interest rate of 8.5 percent per year, what is the value at date t = 8 of a perpetual stream of $1,900 payments with the first payment at date t=14? Multiple Choice O $13,701.13 O $14,865.72 O $15,163.04 $22,452.94 $14,568.41
Compute the simple interest INT for the specified length of time and the future value FV at the end of that time. Round all answers to the nearest cent. You borrow $78,000 for 10 months at 0.03% per month. X INT = $ FV = $
You are trying to value the following investment opportunity: The investment will cost you $22151 today. In exchange for your investment you will receive monthly cash payments of $5195 for 9 months. The first payment will occur at the end of the first month. The applicable effective annual interest rate for this investment opportunity is 7%. Calculate the NPV of this investment opportunity. Round to two decimals (do not include the $-sign in your answer).
Given an interest rate of 6.5 percent per year, what is the value at date t = 8 of a perpetual stream of $900 payments with the first payment at date t = 17?
Derive an equation to find the end-of-year future sum F that is equivalent to a series of n beginning-of-year payments B at interest rate i. Then use the equation to determine the future sum F equivalent to six B payments of $100 at 8% interest.
Scheduled payments of $890 due today, $525 due in 15 months, and $555 due in 33 months are to be replaced by a single equivalent amount paid at the focal date of 6 months from today. Money earns 11.1% compounded quarterly. Using P/Y=C/Y=4 and PMT=0, determine the economically equivalent value for each amount at the focal date and enter the values in the blanks. In your rough work, it may be helpful to draw a timeline with the appropriate focal date for the unknown amount. Round dollar values to 2 decimal places. Moving $890 due today to the focal date: A PV = N= A FV= Moving $525 due in 15 months to the focal date: N = A/ PV = Moving $555 due in 33 months to the focal date: N = A/ PV = The single amount at the focal date is = A FV= A FV = A/ A A/
What is the effective interest rate per payment period for an interest rate of 12% compounded monthly when the payment is quarterly ? Select one: a.0.06 b. 0.5 c. 0.12 d. 0.4 e.0.03
Consider a future value of $2,000, 8 years in the future. Assume that the nominal interest rate is 18.00%. Assume that there is semiannual compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with semiannual compounding. Assume that there is quarterly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with quarterly compounding. Suppose now that the cash flow of $2,000 occurs only 1 year in the future. Assume that there is monthly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with monthly compounding.
Calculate the simple interest rate when P=$3600 , I=_160 and t=4 months. Round to the nearest hundredth
Calculate the simple interest rate when P= $3600 , I = $160 and t = 4 months . Round to the nearest hundredth .
What is the future worth of $1,000 in month 1, $1,040 in month 2, and amounts increasing by $40 per month through month 12, at the end of year 2 if the interest rate is 23.7631528% per year, compounded continuously?
Given an interest rate of 5.7 percent per year, what is the value at t = 8 of a perpetual stream of $4,100 annual payments that begins at t = 18? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value at t = 8 $

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