po.000 END OF YEAR 10 9 8 7 6 $1,400 $1,400 furre vone inteest 11000 facsor Tablesle) $1,400 $1,400 Cash flow $1,400 If the appropriate annual discount rate is 14 percent, what is the present value of this cash-flow stream? 10. Suppose you were to receive $1,000 at the end of 10 years. If your opportunity rate is 10 percent, what is the present value of this amount if interest is compounded (a) annu- ally? (b) quarterly? (c) continuously? 11. In connection with the United States Bicentennial, the Treasury once contemplated offer- ing a savings bond for $1,000 that would be worth $1 million in 100 years. Approximately what compound annual interest rate is implied by these terms? 12. Selyn Cohen is 63 years old and recently retired. He wishes to provide retirement income ) for himself and is considering an annuity contract with the Philo Life Insurance Company. Such a contract pays him an equal-dollar amount each year that he lives. For this cash-flow stream, he must put up a specific amount of money at the beginning. According to actuary tables, his life expectancy is 15 years, and that is the duration on which the insurance company bases its calculations regardless of how long he actually lives. a. If Philo Life uses a compound annual interest rate of 5 percent in its calculations, what must Cohen pay at the outset for an annuity to provide him with $10,000 per year? (Assume that the expected annual payments are at the end of each of the - b. What would be the purchase price if the compound annual interest rate is 10 percent? c. Cohen had $30,000 to put into an annuity. How much would he receive each year if the insurance company uses a 5 percent compound annual interest rate in its calcula- of tions? A 10 percent compound annual interest rate? 60 15 years.)