Assume that you are nearing graduation and that you have applied for a job with a local

Question:

Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank’s evaluation process, you have been asked to take an examination that covers several financial analysis techniques. The first section of the test addresses analysis. See how you would do so by answering the following questions.
(a) Draw time lines for:
A $100 lump sum cash flow at the end of year 2,
An ordinary of $100 per year for 3 years, and
An uneven cash flow stream of ‐$50, $100, $75, and $50 at the end of Years 0 through 3.
(b) What is the of $100 after 3 years if it earns 10%, annual compounding?
(c) What is the present value $100 to be received in 3 years if the interest rate is 10%, annual compounding?
(d) What annual interest rate would cause $100 to grow to $125.97 in 3 years?

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