these are 4 questions in cooperate finance seminar .

1.) Suppose that you will receive $10,000 five years from now. What is it worth today? What is it worth 3 years from today? What is it worth 10 years from today? What constant payment for the next 20 years is equivalent to receiving $10,000 five years from now? Assume the cost of capital is 10%. 2.) Suppose you plan to purchase a car. You tell the car salesperson you can pay $200 per month. The salesperson offers you the following options. a. A car that is worth $7,000 dollars for $200 a month for 4 years at 3% APR. b. A car that is worth $13,000 dollars for $200 a month for 5 years at 4% APR. c. A car that is worth $15,000 dollars for $200 a month for 7 years at 5% APR. Which of these options is the best deal? 3.) Suppose that 2 years from now you will deposit $100 into an account paying 10% APR. In years 4, 6, ... 50 (every even year) you will deposit 105, 110.25, ... 322.51 respectively (5% growth in the deposit). In odd years (starting year 3) 3, 5, ... 49 you will withdraw $100 (no growth). How much will be in your account at the end of year 50? 4.) Suppose you are evaluating the following investment opportunity. The firm is expected to have cash flows of $100 starting one year from now and they are expected to grow by 10% each of the next 4 years. Every year following year five the cash flows will grow by 7%. Assuming the cost of capital is 8%, what is the value of this firm today? 1.) Suppose that you will receive $10,000 five years from now. What is it worth today? What is it worth 3 years from today? What is it worth 10 years from today? What constant payment for the next 20 years is equivalent to receiving $10,000 five years from now? Assume the cost of capital is 10%. It is Worth Today = 10000/1.1^5 It is Worth Today = 6209.21 Worth 3 years from today = 10000/1.1^2 Worth 3 years from today = 8264.46 Worth 10 years from today = 10000*1.1^5 Worth 10 years from today = 16105.10 Constant payment for the next 20 YEARS = Worth Today/((1-(1+r)^-n)/r) Constant payment for the next 20 YEARS = 6209.91/((1-(1+10%)^-20)/10%) Constant payment for the next 20 YEARS = $ 729.41 2.) Suppose you plan to purchase a car. You tell the car salesperson you can pay $200 per month. The salesperson offers you the following options. a. A car that is worth $7,000 dollars for $200 a month for 4 years at 3% APR. b. A car that is worth $13,000 dollars for $200 a month for 5 years at 4% APR. c. A car that is worth $15,000 dollars for $200 a month for 7 years at 5% APR. Which of these options is the best deal? a) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(48,200,-7000,0) Monthly rate = 1.37% b) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(60,200,-13000,0) Monthly rate = - 0.259% c) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(84,200,-15000,0) Monthly rate = 0.272% Since Monthly Rate of Option B are lower among all , the best deal is A car that is worth $13,000 dollars for $200 a month for 5 years 1.) Suppose that you will receive $10,000 five years from now. What is it worth today? What is it worth 3 years from today? What is it worth 10 years from today? What constant payment for the next 20 years is equivalent to receiving $10,000 five years from now? Assume the cost of capital is 10%. It is Worth Today = 10000/1.1^5 It is Worth Today = 6209.21 Worth 3 years from today = 10000/1.1^2 Worth 3 years from today = 8264.46 Worth 10 years from today = 10000*1.1^5 Worth 10 years from today = 16105.10 Constant payment for the next 20 YEARS = Worth Today/((1-(1+r)^-n)/r) Constant payment for the next 20 YEARS = 6209.91/((1-(1+10%)^-20)/10%) Constant payment for the next 20 YEARS = $ 729.41 2.) Suppose you plan to purchase a car. You tell the car salesperson you can pay $200 per month. The salesperson offers you the following options. a. A car that is worth $7,000 dollars for $200 a month for 4 years at 3% APR. b. A car that is worth $13,000 dollars for $200 a month for 5 years at 4% APR. c. A car that is worth $15,000 dollars for $200 a month for 7 years at 5% APR. Which of these options is the best deal? a) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(48,200,-7000,0) Monthly rate = 1.37% b) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(60,200,-13000,0) Monthly rate = - 0.259% c) Monthly rate = rate(nper,pmt,pv,fv) Monthly rate = rate(84,200,-15000,0) Monthly rate = 0.272% Since Monthly Rate of Option B are lower among all , the best deal is A car that is worth $13,000 dollars for $200 a month for 5 years 3.) Suppose that 2 years from now you will deposit $100 into an account paying 10% APR. In years 4, 6, ... 50 (every even year) you will deposit 105, 110.25, ... 322.51 respectively (5% growth in the deposit). In oddyears (starting year 3) 3, 5, ...49 you will withdraw $100 (no growth). How much will be in your account at the end of year 50? 2 Year Equivalent rate = (1+10%)^2 -1= 21% Future Worth of even cash flow = 100/(21%-5%) *(1-(1+5%)^25/(1+21%)^25) *(1+21%)^25 Future Worth of even cash flow = $ 71,252.81 Future Worth of odd cash flow = 100*((1+21%)^25-1)/21% * (1+10%) Future Worth of odd cash flow =$ 60,966.64 Amount will be in your account at the end of year 50 = 71252.81+60966.64 Amount will be in your account at the end of year 50 = $ 132,219.45