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.

Instructions Problem1 Problem2 Problem3 COMPUTING THE PRESENT VALUE OF CONSTANT FLOWS Discount Rate 10% Year Cash flow PV(Cash Flows) 100 100 100 100 100 2 CF 4 5 Find the present values of the above cashflows using: Summing PV(Cash Flows) Using NPV function Using PV function Instructions Problem1 Problem2 Problem3 Problem4 Problem COMPUTING THE PRESENT VALUE OF NONCONSTANT FLOWS Discount Rate 10% Year Cash flow PV/Cash Flows 100 200 300 400 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 doesnt work for this case Instructions Problem1 Problem2 Problem3 Proble COMPUTING THE VALUE OF A FINITE ANNUITY 1000 Periodic Payment, P Number of Periods, n Discount Rate, r 10% Find the value of the annuity using: Annuity Formula Using PV function 1-(1r)" PVA(P,r,n)-P Cash flow 1,000 1,000 1,000 1,000 1,000 Find the present value of the annuity using: Using NPV function Instructions Problem1 Problem2 Problem3 Problem4 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+g |PVA(P. r, g, n)-- Year Cash flow 1,000 1,060 1,123.6 1,191.016 1,262.477 Find the present value of the annuity using Using NPV function Instructions Problem1 Problem2 Problem3 Problem4 Problem5 AMORTIZATION TABLE Loan Principal Interest Rate Loan Termyear) Payments per Year Number of Payments Monthly Payment complete lhe followingmortization table and graph the evolution of the payments to interest and to prieipal as we get closer to the loan maturity Hint: The ending balance in the last payment must equal zero. To graph the series, just select the month column and the two other columns and plot as a scatter plot Month Beginning Balance Payment Payment tamente Interest lerestrnipalEnding Balance 10 12 13 15 27 32 50 57