A Find the present value of the following cash flows at 2%, 5%, and 9%, T=6 |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|
Question:
A
Find the present value of the following cash flows at 2%, 5%, and 9%,
T=6
- |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|
30 30 30 30 30 30
1000
T=10
- |---------|---------|--------|--------|--------|--------|---------|--------|--------|---------|
30 30 30 30 30 30 30 30 30 30
1000
T=6
- |---------|---------|--------|---------|-------|--------|--------|--------|--------|--------|
50 50 50 50 50 50
1000
T=10
- |---------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
50 50 50 50 50 50 50 50 50 50
1000
T=6
- |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|
80 80 80 80 80 80
1000
T=10
- |---------|---------|--------|--------|--------|--------|---------|--------|--------|--------|
80 80 80 80 80 80 80 80 80 80
1000
Part B
For each of the sets of cash flows, and using the value you derived at a 5%, do the following
Multiply each cash flow by the time period associated with the cash flow. For example for the first set of cash flow you would:
30 * 1
30 * 2
30 * 3
30 * 4
30 * 5
1030 * 6
Divide each product you just calculated by (1.05)time
30 / 1.05
60 / 1.1025
90 / 1.15762
120 / 1.21551
150 / 1.27628
6180 / 1.34010
Add the numbers you just calculated 4988.602954
Divide that sum by whatever you got in part A for the first set of cash flows using the 5% rate of 5.552228552
Repeat these steps for the remaining sets of cash flows limiting your analysis to the 5% rate for present value.
Discuss what you observe in Part A. What do you observe in Part B?
Expert Answer:
Solution Excel Formula PARTB SET2 Given NoteFrom the given set of cash flows limiting the analysis to 5rate of present value Nper10 PMT30 FV1000 Present value at 584557 Step1 Cash flow would be calcul... View the full answer
