Activity 3.1a Based on the following cash flows, determine the patterns of each cash flow. Year SS TT UU VV XX YY 0 300,000 1 120,000 100,000 150,000 200,000 2 120,000 100,000 90,000 200,000 3 120,000 100,000 200,000 4 120,000 - 100,000 450,000 115,000 5 120,000 - 120,000 200,000 Activity 3.1b Sophia Brown places $5,200 in a fixed deposit account paying 4 percent interest compounded annually. She would like to predict her total saving if she plans to withdraw her deposit only at the end of year 6. a) Draw a timeline for Sophia Brown to illustrate her investment plan. b) Determine the appropriate technique for Sophia Brown for her prediction. c) Calculate predicted amount that Sophia Brown could withdraw at the end of year 6. d) How does the predicted value may change if the bank offers 3 percent interest compounded annually? e) How does the predicted value may change if the bank offers 4 percent interest compounded semi-annually? f) How does the predicted value may change if Sophia Brown decided to deposit her money until 4 years instead of 6 years using 4 percent interest compounded annually? g) How does the predicted value may change if Sophia Brown decided to deposit her money until 8 years instead of 6 years using 4 percent interest compounded annually? h) In case Sophia Brown needs to accumulate $7,000 by the end of the year 6, determine the required amount to be deposited in the investment account that offers a 4 percent interest rate per annum. Activity 3.1c Kelvin Lee, 65 years old just retired from his job. Recently he won a cash price from a competition amounted to $110,400. He plans to save this money to support his retirement savings. Instead of spending the money immediately, Kelvin deposit this money into an investment with an estimation to withdraw and equal amount of $15,000 per year for the next 10 years. Advise Kelvin on the appropriate investment rate in order for him to achieve his financial plan. Activity 3.1d Cash flows of A and B totalling $2,000,000 in each case. Consider the mixed streams of cash flows A and B in the following table: Year A ($) B ($) 1 600,000 200,000 2 500,000 300,000 3 400,000 400,000 4 300,000 500,000 5 200,000 600,000 Totals 2,000,000 2,000,000 a) Find the total present value for each cash flows using a 16 percent discount rate. b) Compare the computed present values and discuss them in comparison to the undiscounted cash flows totalling $2,000,000 in each case.