\ 10% 01:54 AM module 2-davis,_michaels,_and_co-questions -Saved Sign in File Home Insert Draw Layout ReviewView NewCentu 10 Now consider the second alternative-5 annual payments of $2,000 each. Assume that the payments are made at the end of each year a. What type of annuity is this? b. What is the future value of this annuity if the payments are invested 4. t paying 10.0 percent interest annually? in an accoun What is the future value if the payments are invested with the First National Bank which offers semiannual compounding? c. d. What size payment would be needed to accumulate $20,000 under annual compounding at a 10.0 percent interest rate? $637.97 What lump sum, if deposited today, would produce the same ending value as in Part b? e. f. Suppose the payments are only $1,000 each, but are made every 6 months, starting 6 months from now. What would be the future value if the 10 payments were invested at 10.0 percent annual interest? If they were invested at the First National Bank which offers semiannual compounding? 5. Assume now that the payments are made at the beginning of each period. Repeat the analysis in Question 4 6. Now consider the following schedule of payments \ 10% 1:53 AM module 2-davis,_michaels,_and_co-questions -Saved Sign in Home Insert Draw Layout ReviewView NewCentu 10 7. Consider Bay City Savings Bank, which pays 10.0 percent interest compounded continuously a. What is the effective annual rate under these terms? b. What is the future value of a $10,000 lump sum after 5 years? c. What is the future value of a 5-year ordinary annuity with payments of $2,000 each? 8. The client is also considering borrowing the $20,000 for his daughter's first year of college and repaying the loan over a four-year period. Assuming that he can borrow the funds at a 10 percent interest rate, what amount of interest and principal will be repaid at the end of each year ?. Assume that you are given a set of cash flows on a time line and asked to find their present value. How would you choose the discount rate to apply to these flows? 10. If you are using the Lotus 1-2-3 model, first examine the model closely to see how it works and then complete the model. Don't hesitate to change input values to obtain a better grasp of the model. Also, don't forget to look at the graphs. After you are thoroughly familiar with the model, write a short summary of Lotus's DCF capabilities. Include not only what spreadsheets can do, but how they can be used in financial management decision making