Question
Q1) Mike is expecting an inheritance of $5 million in four years. If he had the money today, he could earn interest at an annual
Q1) Mike is expecting an inheritance of $5 million in four years. If he had the money today, he could earn interest at an annual rate of 5.25 percent. What is the present value of this inheritance? Q2) Mid Corp. is expecting annual cash flows of $100,000, $200,000, $250,000, and $300,000 over the next four years. If it uses a discount rate of 6.25 percent, what is the present value of this cash flow stream? Q3) You bought a corporate bond for $850 today. In five years the bond will mature and you will receive $1,000. What is the rate of return on this bond?
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