Instructions

l Each problem is worth 20 points, for a total of 100 points

l Answer the 5 questions in this worksheet in the highlighted yellow cell following the instructions.

COMPUTING THE PRESENT VALUE OF CONSTANT FLOWS Discount Rate 10% Cash flow PV(Cash Flows) Year 100 100 100 100 100 2 CF 4 Find the present values of the above cashtlows using- Summing PV(Cash Flows) Using NPV function Using PV function InstructionsProblem1 Problem2 Problem3 Problem4 Problem COMPUTING THE PRESENT VALUE OF NONCONSTANT FLOWS Discount Rate 10% Year Cash flow PV(Cash Flows) 100 200 300 400 500 CF Find the present values of the above cashflows using: Summing PV(Cash Flows) Using NPV function Note: In this example the cash flows are not equal. Either discount each cash flow separately or use Excel's NPV function Excel's PV doesn't work for this case COMPUTING THE VALUE OF A FINITE ANNUITY Periodic Payment, P Number of Periods, n Discount Rate, r 1000 10% Find the value of the annuity using: Annuity Formula Using PV function Year A(P,r, n)-P Cash flow 1,000 1,000 1,000 1,000 1,000 2 4 Find the present value of the annuity using: Using NPV function Instructions Problem1 Problem2 Problem3 COMPUTING THE VALUE OF A GROWING ANNUITY Periodic Payment, P Payment Growth, g Discount Rate, r Number of Periods, n 1000 6% 12% Find the value of the annuity using: Annuity Formula 1+9 |PVA(P.ng, n) =-11- Year Cash flow 1,000 1,060 1,123.6 1,191.016 1,262.477 2 4 Find the present value of the annuity using: Using NPV function AMORTIZATION TABLE Loan Principal 120,000 Loan Termlyear) Payments per Year Number of Payments Monthly Payment Complete the following amortization table and graph the evolution of the payments to interest and to principal as we get closer to the loan maturity Hint: The ending balance in the last payment must equal zero To graph the series, jst select the month column and the two other columns and plot as a scalfter Monnninthianse Piment Panteento PPri Principal Ending Balance