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1. Find the future and present values of the following cash flows at different interest rates. (Draw a timeline to visualize each cash flow.)
1. Find the future and present values of the following cash flows at different interest rates. (Draw a timeline to visualize each cash flow.) a. The future value of an initial $1000 for 4 years at 6%. b. The future value of an initial $2000 for 6 years at 9%. c. The present value of $400 due in 3 years at 4%. d. The present value of $800 due in 5 years at 8%. 2. Your company's revenue in the most recent fiscal year was $50 million. The board of directors requires you to boost it to $100 million in 8 years. a. At what annual rate must the revenue grow? b. During a meeting, one of your employees did a quick calculation and explained it: "Since the growth rate is 100% over 8 years, the estimated growth rate would be 12.5%." What's your response to his estimation? 3. How long will it take to double $10,000 if it earns the following rates? a. 7% per year b. 18% per year
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