Consider the following infinite series of cash flows, of which alternate cash flows of $9 and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider the following infinite series of cash flows, of which alternate cash flows of $9 and $5 take place between t-2 and t-26. All other cash flows, including those at t 0, t-1 and from t-27 onwards are $5 per year (with the only except of Year 47, at which the cash flow is $1). Time(yr.) 0 1 2 3 4 5 ... 25 26 27 28 .. 45 46 47 48 49 ... S5 $9 $5 $5 $5 $5 $9 $5 s9 $5 Suppose the effective annual rate is 5%. CF $5 $5 SI $5 s5 a) Calculate the present value (at t-0) of this cash flow series. (Hints: (1) What is the (effective) 2-year rate (E2YR)? (2) Can assume the "basic" cash flows are $5 each year.) b) Is it possible to find the future of this cash flow series? Explain. Consider the following infinite series of cash flows, of which alternate cash flows of $9 and $5 take place between t-2 and t-26. All other cash flows, including those at t 0, t-1 and from t-27 onwards are $5 per year (with the only except of Year 47, at which the cash flow is $1). Time(yr.) 0 1 2 3 4 5 ... 25 26 27 28 .. 45 46 47 48 49 ... S5 $9 $5 $5 $5 $5 $9 $5 s9 $5 Suppose the effective annual rate is 5%. CF $5 $5 SI $5 s5 a) Calculate the present value (at t-0) of this cash flow series. (Hints: (1) What is the (effective) 2-year rate (E2YR)? (2) Can assume the "basic" cash flows are $5 each year.) b) Is it possible to find the future of this cash flow series? Explain.
Expert Answer:
Related Book For
Fundamentals of Database Systems
ISBN: 978-0136086208
6th edition
Authors: Ramez Elmasri, Shamkant Navathe
Posted Date:
Students also viewed these finance questions
-
a) You are provided with the following information relating to V ltd Equity and liabilities 12% debentures (shs1000 at par) 16,000 10% preferences shares 6,250 Ordinary shares (Sh. 10 par) 12,500...
-
Assume that all facts in Case 46 still hold except that the practical capacity of the machinery was 20,000 hours instead of 10,000 hours. a. Compute the unit costs for each product: Diet, Regular,...
-
Find the present worth for the following cash flow series (in $1000 units). i= 6% per year 8 Year 3 4 5 6. 90 90 90 90 100 90 200 200 4.
-
If Jody's records show $2,000 in investment by owner, $10,000 in net income, $5,000 in assets and $1,000 in owner's drawings. What is Jody's ending owner's equity on a statement of changes in owner's...
-
Suppose that you want to evaluate the integral e5x(4cos 7x + 6sin 7x) dx And you know from experience that the result will be of the form e5x(C1 cos 7x + C2 sin 7x) + C3. Compute C1 and C2 by...
-
Why did futures markets originate in agricultural markets? Would a farmer buy or sell futures contracts? What would a farmer hope to gain by doing so? Would General Mills buy or sell futures...
-
An often-ignored concept in breach of contract is the availability, if any, of the award of punitive damages. Often, cases incorporate both breach of contract and tort actions. The tort actions...
-
Current Designs faces a number of important decisions that require incremental analysis. Consider each of the following situations independently. Situation 1 Recently, Mike Cichanowski, owner and CEO...
-
Robert purchased US$15,000 from a bank in America, which charged him a commission of 0.9%, and sold the US dollars to a bank in Canada, which charged him a 0.24% commission. How much money did he...
-
The figure shows a graph of r as a function of in Cartesian coordinates. Use it to sketch the corresponding polar curve. 2. 14 -1-
-
Chick Ltd had the following trial balance on 31. October 2020. 8% Debentures . 000 V000 1,200 Accumulated depreciation at 1.11.19 Equipment 620 Motor Vehicles Allowance for doubtful debts at 1.11.19...
-
On Friday, NOV 2, 2018 stock ACDC was trading for $25/share. 1. ACDC's annual VOL was: = 53%. 2. T-bills traded on NOV 2, 2018 were: With maturity on TH, DEC 20, 2018, exactly 49 days from today;...
-
Name several operating systems that run LANs today. Do not include different versions of a single operating system. For each operating system, list its name, the platform or network it operates on,...
-
If the expected rate of return on the market portfolio is 13 percent and the T-bills yield is 6 percent, what must be the beta of a stock that investors expect to return 10 percent
-
You are attempting to value a call option with an exercise price of $80 and one year to expiration. The underlying stock pays no dividends, its current price is $80, and you believe it has a 50%...
-
Two years ago, the price of a bond was 1,083.45 dollars, and one year ago, the price of the bond was 1,146.68 dollars. Over the past year, the bond paid a total of 66.2 dollars in coupon payments,...
-
What are the main challenges that firms face when expanding their operations in some international markets and how can they address these charges to achieve success in their global marketing efforts?
-
On October 31 Juanita Ortega, owner of Outback Guide Service, received a bank statement dated October 30. Juanita found the following: 1. The checkbook has a balance of $2,551.34. 2. The bank...
-
Suppose we want to create a linear hash file with a file load factor of 0.7 and a blocking factor of 20 records per bucket, which is to contain 112,000 records initially. (a) How many buckets should...
-
In what normal form is the LOTS relation schema in Figure 15.12(a) with respect to the restrictive interpretations of normal form that take only the primary key into account? Would it be in the same...
-
Consider a disk with block size B=512 bytes. A block pointer is P=6 bytes long, and a record pointer is P R =7 bytes long. A file has r=30,000 EMPLOYEE records of fixed-length. Each record has the...
-
Apply the variational method (Approximation 3 ) to the case in exercise 2. Data From Exercise 2:- Consider a helium atom with two electrons in the \(n=2, l=0\) state. Calculate their ground state,...
-
The relativistic Lagrangian for particle is \(L=-m c^{2} \sqrt{1-\vec{v}^{2} / c^{2}}\). Does minimal coupling at the classical level based on it work? Justify.
-
Argue that, for the \(\mathrm{H}_{2}\) molecule, \(E_{+}(R)-2 E_{0}\) tends to infinity from below, and \(E_{-}(R)\) tends to infinity from above.
Study smarter with the SolutionInn App