(1)What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually?

(2)What is the PV of the same stream?

(3)Is the stream an annuity?

(4)An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?