1. The following cash-flow streams need to be analyzed:END OF YEARCASH-FLOWSTREAM1234$100$200$200$300$300600Y1,200200500300a. Calculate the future (terminal) value of each stream at the end of year 5 with a com-pound annual interest rate of 10 percent.b. Compute the present value of each stream if the discount rate is 14 percent.2. Muffin Megabucks is considering two different savings plans. The first plan would have herdeposit $500 every six months, and she would receive interest at a 7 percent annual rate,compounded semiannually. Under the second plan she would deposit $1,000 every yearwith a rate of interest of 7.5 percent, compounded annually. The initial deposit withPlan 1 would be made six months from now and, with Plan 2, one year hence.a. What is the future (terminal) value of the first plan at the end of 10 years?b. What is the future (terminal) value of the second plan at the end of 10 years?

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a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.

a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.

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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1. The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM 1 2 3 4 w $100 $200 $200 $300 $300 600 Y 1,200 z 200 500 300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a com- pound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent. 2. Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7 percent annual rate, compounded semiannually. Under the second plan she would deposit $1,000 every year with a rate of interest of 7.5 percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with Plan 2, one year hence. a. What is the future (terminal) value of the first plan at the end of 10 years? b. What is the future (terminal) value of the second plan at the end of 10 years?
1. Draw a cash flow diagram showing payments of S6000 now, $2500 two years from now and $4500 six years from now. Interest rate is 9% per year. For the given cash flows find the: a) Total present worth equivalent. b) Total future worth equivalent. and c) Equivalent annual worth (uniform series) from year 1 to 6.
Find the annual worth (AW) that is equivalent to the following cash flow diagram, if the interest rate is 8% per year. 2 3 4. 6. 7. Time (year) 3000 4000 5000 0. 2000 Cash flow ($) Answer:
QI. KNOWLEDGE AND UNDERSTANDING DRAWING CASH FLOW DIAGRAM Draw the ww m mm cash flow diagram for the following : 1. Assume that you want to deposit an amount (BD120,000.00) into an account three years from now in order to be able to withdraw BD750 per year for ten years starting four years from now. Assume that the interest rate is 4.5% per year. Construct the cash flow diagram. 2. Suppose that you want to make a deposit into your account now such that you can withdraw an equal amount (A1) of BD300 per year for the first five years starting one year after your deposit and a different annual amount (A2) of BD600 per year for the following three years. With an interest rate (i) of 5.5% per year, construct the cash flow diagram. 3. If you deposit BD1,500 now, BD3,600 three years, BD2000 seven years, and BD1,800 nine years from now in a savings account that pays 10% interest, how much would you have at the end of year 25? Construct the cash flow diagram.
Suppose 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.
What is the present value of the following cash-flow stream if the interest rate is 4%? Year 1: $170; 2: $370; 3:$270
What is the present value of the following stream of cash flows if the discount rate is 9%? Year 1-5: $14,000 inflow Years 6-20: $23,000 inflow (Use the present value tables in your course packet for any present value calculations. Round your final answer to the nearest dollar.)
Wells, Inc., has identified an investment project with the following cash flows. Cash Flow $ 950 1,180 1,400 2,140 Year 1 ~34 2 a. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value at an interest rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the future value at an interest rate of 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Future value at 8 percent b. Future value at 11 percent Future value at 24 percent c.
McCann Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $800 2 1,030 3 1,340 4 1,110 a If the discount rate is 10 percent, what is the present value of these cash flows? b What is the present value at 18 and 28 percent?
What is the value of the following cash flows in year 6? What is the value today? Assume interest rates today are 6.5%, then rates will be 6.25% for the next 4 years, 3.75% for the next 3 years, 5.3% for the next 4 years, and 3.75% thereafter. year cashflow 6 5,675 8 9,725 10 6,750 17 11,750 Must show work with formulas provided.
Christie, Incorporated, has identified an investment project with the following cash flows. Year 1234 Cash Flow $ 1,070 1,300 1,520 2,260 a. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the future value at an interest rate of 11 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the future value at an interest rate of 24 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Future value at 8 percent b. Future value at 11 percent c. Future value at 24 percent SCHO E 20 NE 201 oder als 20 HUG
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.)

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