Relationship between future value and present value-Mixed stream Using the information in the accompanying table...

90.2K

Verified Solution

Question

Finance

image
image
Relationship between future value and present value-Mixed stream Using the information in the accompanying table answer the questions that follow a. Determine the present value of the mixed stream of cash flows using a 5% discount rate b. Suppose you had a lump sum equal to your answer in part a on hand today If you invested this sum for 5 years and earned a 5% return each year, how much would you have after 5 years? c. Determine the future value 5 years from now of the mixed stream using a 5% interest rate Compare your answer here to your answer in part b d. How much would you be willing to pay for an opportunity to buy this stream, assuming that you can at best earn 5% on your investments? he nearest Data Table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Year (0) Cash flow 0 $0 1 $800 2 $900 3 $1,200 $1,500 $1900 4 Print Done Annuities and compounding Personal Finance Problem Janet Boyle intends to deposit $380 per year in a credit union for the next 10 years, and the credit union pays an annual interest rate of 8% a. Determine the future value that Janet will have in 10 years, given that end-of-period deposits are made and no interest is withdrawn, if (1) $380 is deposited annually and the credit union pays interest annually (2) S190 is deposited semiannually and the credit union pays interest semiannually (3) 595 is deposited quarterly and the credit union pays interest quarterly b. Use your finding in part a to discuss the effect of more frequent deposits and compounding of interest on the future value of an annuity sults

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students