For each of the questions below, draw the time line and compute the present value or...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
For each of the questions below, draw the time line and compute the present value or future value as required. Show all your work. Draw the time line, write the formula and show what you plugged into the excel formula to get the answer. a. Present value of $5,000 received 10 years from today if the interest rate is 12% per year. b. Future value of $10,000 received 5 years from today if left in an account until 40 years from today, when the rate of return is 10% per year. c. Present value of $5,000 received 4 years from today and $6,000 received 20 years from today if the rate of return is 8% per year. d. Future value of the cash flows in part (c) above when evaluated 50 years from today at 8% per year. e. Present value of an annuity of 10 payments of $1,000 each starting today at t=1 and ending at t=10 when the interest rate is 10% per year. f. Present value of an annuity of 10 payments of $1,000 each starting today at t=0 and ending at t=9 when the interest rate is 10% per year. g. Future value of an annuity of 10 payments of $1,000 each, starting today at t=1 and ending at t=10 when the interest rate is 10% per year and the future value is computed for t=10. h. Future value of an annuity of 10 payments of $1,000 each, starting today at t=0 and ending at t-9 when the interest rate is 10% per year and the future value is computed for t=10. i. Present value of an annuity of monthly payments of $100 starting 1 year from now, and lasting for 5 years (60 payments) with an APR of 6% per year with monthly compounding. j. Present value of a growth perpetuity that starts 7 years from today, with the first payment of $1,000, a growth rate of 1% per year, and a required rate of return of 9% per year. For each of the questions below, draw the time line and compute the present value or future value as required. Show all your work. Draw the time line, write the formula and show what you plugged into the excel formula to get the answer. a. Present value of $5,000 received 10 years from today if the interest rate is 12% per year. b. Future value of $10,000 received 5 years from today if left in an account until 40 years from today, when the rate of return is 10% per year. c. Present value of $5,000 received 4 years from today and $6,000 received 20 years from today if the rate of return is 8% per year. d. Future value of the cash flows in part (c) above when evaluated 50 years from today at 8% per year. e. Present value of an annuity of 10 payments of $1,000 each starting today at t=1 and ending at t=10 when the interest rate is 10% per year. f. Present value of an annuity of 10 payments of $1,000 each starting today at t=0 and ending at t=9 when the interest rate is 10% per year. g. Future value of an annuity of 10 payments of $1,000 each, starting today at t=1 and ending at t=10 when the interest rate is 10% per year and the future value is computed for t=10. h. Future value of an annuity of 10 payments of $1,000 each, starting today at t=0 and ending at t-9 when the interest rate is 10% per year and the future value is computed for t=10. i. Present value of an annuity of monthly payments of $100 starting 1 year from now, and lasting for 5 years (60 payments) with an APR of 6% per year with monthly compounding. j. Present value of a growth perpetuity that starts 7 years from today, with the first payment of $1,000, a growth rate of 1% per year, and a required rate of return of 9% per year.
Expert Answer:
Answer rating: 100% (QA)
To solve these time value of money problems well use the formulas for present value PV and future value FV and calculate the values stepbystep Lets begin with each question a Present value of 5000 rec... View the full answer
Related Book For
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
Posted Date:
Students also viewed these finance questions
-
You have completed your first meeting with Harper and Riley Evans. You are confident that you now have most of the information you will need to prepare a comprehensive financial plan for them. Beyond...
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
A bakery with a December 31 st year end purchased new equipment on October 31 st 2000 for $10,000. This was their first equipment purchase. Required: What are the tax consequences if the equipment is...
-
What is the square root of 3 to the square root of 2 power times the square root of 3 to the negative square root of 2 power?
-
A model of a helicopter rotor has four blades, each 3.40 m long from the central shaft to the blade tip. The model is rotated in a wind tunnel at 550 rev/min (a) What is the linear speed of the blade...
-
Use the information in Figure 7-12 of the chapter. Required: Prepare flexible budgets for the production and sale of 29,000 units and 31,000,respectively. 1 Item 2 Sales ($150 per unit) 3 Direct...
-
How many chemicals should be reported on in toxic release and national pollutant inventories and polluting emissions registers? What criteria have affected your choice?
-
Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for stockholders equity.
-
Please view the Video from TedX, The Power of Touch, a discussion with Jane Anderson., The Power of Touch | Jane Anderson | https://www.youtube.com/watch?v=tafP2OgttCI After viewing the video, kindly...
-
5 I . 1 2 im 4 5 5 7 B SCENARIO & REQUIREMENTS SCENARIO: You have invented the first maintenance-free jet wax called "Jetwax 100." Jetwax 100 can last up to 1 year on any plane surface. In order to...
-
On January 1, Marigold Corp. had 1200000 shares of $ 10 par value common stock outstanding. On March 31 the company declared a 10 % stock dividend. Market value of the stock was $ 16 /share. As a...
-
Just as financial statement auditing varies by industry, so too does internal auditing, in part because the risks vary from industry to industry. For example, the risks related to accounting...
-
The agenda of a forthcoming meeting of the audit committee of a board of directors indicates that you are to discuss coordination between independent and internal auditors. Required: 1. What are the...
-
What is the relationship between audit conclusions reached for individual financial statement accounts and an auditor's overall opinion on the financial statements taken as a whole?
-
During the audit of purchasing and inventory operations, an internal auditor discovers that significant quantities of purchased materials are neither in stock nor accounted for. Stock records,...
-
The internal auditing department of a large service entity is responsible to the controller who, in turn, is responsible to the president. As part of the internal audit responsibility, regular audits...
-
Miller Co, discovered that, in the prior year, it failed to report $40,000 of depreciation related to a newly constructed building. The depreciation was computed correctly for tax purposes. Tax rate...
-
Write a paper about how diet relates to breast cancer in women study design to use: case control study purpose & rationale the purpose of this final project is to utilize the methods and...
-
Nokia (Finland) is still among the leaders in the telecommunication industry, with emphasis on cellular phones and other wireless solutions. The consolidated financial statements are prepared in...
-
Poulenc & Associates, a consulting firm, was incorporated on 1 June X1. On 30 June, the trial balance shows the following balances for selected accounts: Analysis reveals the following additional...
-
Once upon a time many, many years ago, there lived a feudal landlord in a small province of Western Carthage. The landlord, Sheik Selim, lived in a castle high on a hill. He was responsible for the...
-
A computer input control is designed to ensure that a. Machine processing is accurate. b. Only authorized personnel have access to the computer area. c. Computer processing has been performed as...
-
In its computer processing system a company might use check digits to detect which of the following errors? a. Recording an invalid customers identification charge account number. b. Assigning a...
-
In a credit sales and cash receipts system flowchart symbol X could represent a. Auditors test data. b. Remittance advices from customers. c. Error reports. d. Credit authorization forms.
Study smarter with the SolutionInn App