Solve the following time value of money problems assuming the interest rate is 8 percent. a. A

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Solve the following time value of money problems assuming the interest rate is 8 percent.

a. A couple wishes to save $250,000 over the next 18 years for their child’s college education. What uniform annual amount must they deposit at the end of each year to accomplish their objective?

b. How long must a stream of $600 payments last to justify a purchase price of $7,500? Suppose the stream lasted only five years. How large would the salvage value (liquidating payment) need to be to justify the investment of $7,500?

c. The projected cash flows for an investment appear below. What is the investment’s NPV?

Year Cash flow 0 -$200 1 50 2 75 3 110 4 110 S 80

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Related Book For  answer-question

ISE Analysis For Financial Management

ISBN: 9781265042639

13th International Edition

Authors: Robert C. Higgins Professor, Jennifer Koski

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