Assume that you are nearing graduation and have applied for a job with a local bank. The bank’s evaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test addresses DCF analysis. See how you would do by answering the following questions. a. Draw time lines for (1) a €100 lump sum cash flow at the end of Year 2, (2) an ordinary annuity of €100 per year for 3 years, and (3) an uneven cash
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Assume that you are nearing graduation and have applied for a job with a local bank.
The bank’s evaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test addresses DCF analysis. See how you would do by answering the following questions.
a. Draw time lines for (1) a €100 lump sum cash flow at the end of Year 2, (2) an ordinary annuity of €100 per year for 3 years, and (3) an uneven cash flow stream of −€50, €100, €75 and €50 at the end of Years 0 to 3.
b. (1) What’s the future value of an initial €100 after 3 years if it is invested in an
account paying 10 per cent annual interest? (2) What’s the present value of €100 to be received in 3 years if the appropriate interest rate is 10 per cent?
c. (1) What is the future value of a 3-year ordinary annuity of €100 if the appropriate interest rate is 10 per cent? (2) What’s the present value of the annuity
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