Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Find the following values assuming a regular, or ordinary, annuity: The present value of $400 per year for ten years at 10 percent The future
- Find the following values assuming a regular, or ordinary, annuity:
- The present value of $400 per year for ten years at 10 percent
- The future value of $400 per year for ten years at 10 percent
- The present value of $200 per year for five years at 5 percent
- The future value of $200 per year for five years at 5 percent
- Consider an uneven cash flow stream:
- The present value of $400 per year for ten years at 10 percent
- The future value of $400 per year for ten years at 10 percent
- The present value of $200 per year for five years at 5 percent
- The future value of $200 per year for five years at 5 percent
Year | Cash Flow |
0 | $2,000 |
1 | $2,000 |
2 | $0 |
3 | $1,500 |
4 | $2,500 |
5 | $4,000 |
-
-
- What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 10 percent?
- What is the value of the cash flow stream at the end of Year 5 if the cash flows are invested in an account that pays 10 percent annually?
- What cash flow today (Year 0), in lieu of the $2,000 cash flow, would be needed to accumulate $20,000 at the end of Year 5? (Assume that the cash flows for Years 1 through 5 remain the same.)
-
- PLEASE SHOW ALL OF YOUR WORK!!!! THANK YOU!!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started