Question
(4-13) Find the present value of the following ordinary annuities (see the Notes to Problem 4-12). a. $400 per year for 10 years at 10%
(4-13) Find the present value of the following ordinary annuities (see the Notes to Problem 4-12).
a. $400 per year for 10 years at 10%
b. $200 per year for 5 years at 5%
c. $400 per year for 5 years at 0%
d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
(4-14) a. Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculators cash flow register, you must enter
CF0 5 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the file Ch04 Tool Kit.xlsx.) Year Cash Stream A Cash Stream B 1 $100 $300 2 400 400 3 400 400 4 400 400 5 300 100 b. What is the value of each cash flow stream at a 0% interest rate?
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