Question
Please solve with a financial calculator and show each step you use with the financial calculator! 1. Suppose that an income producing property is expected
Please solve with a financial calculator and show each step you use with the financial calculator!
1. Suppose that an income producing property is expected to yield cash flows for the owner of $10,500 in each of the next five years, with cash flows being received at the end of each period. If the opportunity cost of investment is 15% annually and the property can be sold for $100,500 at the end of the fifth year, determine the value of the property today. Draw your cash flow diagram and show your steps used in financial calculator.
2. Suppose an investor deposits $25000 in an interest-bearing account at her local bank. The account pays 2.5% interest compounded annually. If the investor plans on withdrawing the original principal plus accumulated interest at the end of 5 years, what is the total amount that she should expect to receive assuming interest rates do not change? Draw your cash flow diagram and show your steps used in financial calculator.
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