MS Excel Function for PV: =PV(RATE, NPER, PMT, [FV], [TYPE]) 1. You need $5,000 in 4 years. You can invest in an account that earns you 8.4% per year compounded annually. How much do you have to invest today to reach your goals, if You plan to invest additionlly each year $300 ? Assume payments will be at the end of each year. 1. You will receive $250 at the end of each year for the next 10 years. What is the present value of that cash flow if the proper discount rate is 4% per year? (Hint: there is no additional cosh flow ot the end of 10 years.) 2. You will receive $250 at the end of each year for the next 10 years. At the end of 10 years you will receive a final payment of $500. What is the present value of that cash flow if the proper discount rate is 4% per year? n. 3. You will receive $50 at the end of each month for the next 10 years. At the end of 10 years you will receive a final payment of $500. What is the present value of that cash flow if the proper discount rate is 4% per year compounded monthly? . You plan on borrowing in order to buy a condo. You want to borrow for 30 years and make monthly payments. The maximum monthly payment you can make is $850 per month. You want to pay the whole loan back by the end of 20 years (Hint: FV=0 ). You have checked with your banker that your annual mortgage interest would be 5.5% per year. What is the maximum loan amount you can borrow under these conditions? 5. Jill has discovered that she holds the winning lottery ticket. Lottery company has offered her an option to take out the winnings in annual payments of $100,000 over the next 5 years. If Jill's opportunity cost is 6% per year what is the present value of this annuity cash flow? Assume payments are at the end of each year. n 6. Your career goal is to become financial analyst. You have researched the salaries for financial analysts and found out that the average annual salary of financial analysts is $65,000 per year. Assume your career will be 40 years and there is no change in the salary over that time. If the inflation of 3% per year is aproper discount rate, what would be the present value of your future earnings