3. An asset will produce the following series of cash flow. At the end of the...

 

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3. An asset will produce the following series of cash flow. At the end of the first two years, $2,000 each year. At the end of each of the following three years, $5,000. And, at the end of each of the following four years, $9,000. If your required rate of return is 5 percent, how much is this asset worth to you? 4. Your account pays interest at a rate of 5 percent per year and the interest is computed once a year. You deposit $2,000 in the account today. If you are allowed to withdraw money at the end of the second and the 5th year only, how much should you withdraw at the end of the second year to ensure that you have exactly $2,000 in the account at the end of the 5th year? 3. An asset will produce the following series of cash flow. At the end of the first two years, $2,000 each year. At the end of each of the following three years, $5,000. And, at the end of each of the following four years, $9,000. If your required rate of return is 5 percent, how much is this asset worth to you? 4. Your account pays interest at a rate of 5 percent per year and the interest is computed once a year. You deposit $2,000 in the account today. If you are allowed to withdraw money at the end of the second and the 5th year only, how much should you withdraw at the end of the second year to ensure that you have exactly $2,000 in the account at the end of the 5th year?

Answer rating: 100% (QA)

3To calculate the present value of the cash flows we can use the formula for the present value of an ... View the full answer