Using a financial calculator or an Excel spreadsheet, calculate the following. a. The present value of $500
Question:
Using a financial calculator or an Excel spreadsheet, calculate the following.
a. The present value of $500 to be received four years from now, using an 11% discount rate.
b. The present value of the following end-of-year income streams, using a 9% discount rate and assuming it is now the beginning of 2018.
End of Year ______Income Stream A ________Income Stream B
2018 .......................... $80 .......................................... $140
2019 ......................... $80 .......................................... $120
2020 ......................... $80 .......................................... $100
2021 ......................... $80 .......................................... $ 80
2022 ......................... $80 .......................................... $ 60
2023 ......................... $80 ......................................... $ 40
2024 ......................... $80 ......................................... $ 20
Discount RateDepending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Step by Step Answer:
a Present value of 500 to be received in four years at an 11 discount rate N 4 i 11 ...View the full answer
Fundamentals Of Investing
ISBN: 9780134083308
13th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
