Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Determine the present worth of the following cash flows if the interest rate is 6% per year:
Transcribed Image Text:End of
1 2
3
4
Year
Cash -S10,000 –$20,000 $35,000 $48,000 –S3,000
Flow
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- Using the future values tables, solve the following: What is the future value on December 31, Year 11, of 20 cash flows of $15,000 with the first cash payment made on December 31, Year 1, and the annual interest rate of 10% being compounded semiannually?arrow_forwardSuppose that every 2 years beginning 3 years from now you will receive $151 in perpetuity. Assuming that the annual opportunity cost of capital is 7%, what is this stream of cash flows worth today? Round your final answer to two decimals.arrow_forwardAn investment, which is worth $57,023.00 and has an expected return of 17.00 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 3 years from today? O $9,693.91 (plus or minus 3 dollars) O $35,603.48 (plus or minus 3 dollars) O $6,052.59 (plus or minus 3 dollars) O $8,285.39 (plus or minus 3 dollars) O none of the answers are within 3 dollars of the correct answerarrow_forward
- What is the value in year 11 of a $2,100 cash flow made in year 3 if interest rates are 8 percent?arrow_forwardCompute the PV of a perpetuity with monthly payments of $1,000, given an annual discount rate of 4% and a constant annual growth rate in the payment stream of 2% ?arrow_forwardWe expect a perpetuity of quarterly cash flows of $80,000 starting in 1 quarter. Given a discount rate of 5.75% per year compounded semi-annually, what is the present value of this perpetuity?arrow_forward
- What is the present value of a savings account that is expected to pay $1,250 of cash inflow at the end of year 1, $0 cash inflow at the end of year 2 and $1,050 cash inflow at the end of 3rd year given the rate of return 10% in the first and second year and 12% in the third year? Please Show the workarrow_forwardAt a 10% interest rate, what is the future sum at year 5, that is equivalent to the series of payments in the given cashflow: Year 1 Year 2 $1,400 $7,660 $7,616 $7,212 $1.320 $5,995 Year 3 $1,240 Year 4 $1,190 Year 5 $1,000arrow_forward
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