Basic 6.1 Future value with multiple cash flows: Konerko, Inc., management expects the company to earn cash flows of $13,227, $15,611, $18,970, and $19,114 over the next four years. If the company uses an 8 percent discount rate, what is the future value of these cash flows at the end of Year 4? .2 Future value with multiple cash flows: Ben Woolmer has an investment that will pay him the following cash flows over the next five years: $2,350, $2,725, $3,128, $3,366, and $3,695. If his investments typically earn 7.65 percent, what is the future value of the investment's cash flows at the end of five years? 6.3 Future value with multiple cash flows: You are a freshman in college and are planning a trip to Europe when you graduate from college at the end of four years. You plan to save the following amounts annually, starting today: $625, $700, $700, and $750. If you can earn 5-75 percent annually, how much will you have at the end of four years? 6.4 Present value with multiple cash flows: Saul Cervantes has just purchased some equipment for his landscaping business. For this equipment he must pay the following amounts at the end of each of the next five years: $10,450, $8,500, $9,675, $12,500, and $11,635. If the appropriate discount rate is 10.875 percent, what is the cost in today's dollars of the equipment Saul purchased today? 6.5 Present value with multiple cash flows: Jeremy Fenloch borrowed some money from his friend and promised to repay him $1,225, $1,350, $1,500, $1,600, and $1,600 over the next five years. If the friend normally discounts investment cash flows at 8 percent annually, how much did Jeremy borrow? 6.6 Present value with multiple cash flows: Biogenesis Inc. management expects the following cash flow stream over the next five years. The company discounts all cash flows using a 23 percent discount rate. What is the present value of this cash flow stream? 5 Year -$1,133,676 -$978,452 $275,455 $878,326 $1,835,444 6.7 Present value of an ordinary annuity: An investment opportunity requires a payment of $750 for 12 years, starting a year from today. If your required rate of return is 8 percent, what is the value of the investment to you today? 6.8 Present value of an ordinary annuity: Dynamics Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $22,500 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment? 6.9 Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have at the end of seven years? 6.10 Future value of an ordinary annuity: Cecelia Thomas is a sales executive at a Baltimore firm. She is 25 years old and plans to invest $3,000 every year in an IRA account, beginning at the end of this year, until she reaches age 65. If the IRA investment will earn 9.75 percent annually, how much will she have in 40 years, when she turns 65? "Back to Page