An investment is expected to generate cash flows of $20000 next year (at time t=1), and...

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An investment is expected to generate cash flows of $20000 next year (at time t=1), and $10000 in two years at time t=2. After that, the annual cash flows generated by the investment will decrease forever at growth rate of -8% APR compounded annually. What is the present value of this stream of cash flows if r=10% APR compounded annually? (rounded to nearest 10th) 2. If you start depositing a constant $200 per month in a particular fund, starting next month, your advisor thinks you should have $936264.05 forty years later. What effective annual rate of return (EAR) is the advisor assuming that the fund will provide? (rounded to nearest basis point, as in "0.1234") An investment is expected to generate cash flows of $20000 next year (at time t=1), and $10000 in two years at time t=2. After that, the annual cash flows generated by the investment will decrease forever at growth rate of -8% APR compounded annually. What is the present value of this stream of cash flows if r=10% APR compounded annually? (rounded to nearest 10th) 2. If you start depositing a constant $200 per month in a particular fund, starting next month, your advisor thinks you should have $936264.05 forty years later. What effective annual rate of return (EAR) is the advisor assuming that the fund will provide? (rounded to nearest basis point, as in "0.1234")

Answer rating: 100% (QA)

To calculate the present value of the cash flows and the effective annual rate of return we can use ... View the full answer