A series of cash flows are established on an account as listed below: Payment of P375 at the end of the 2nd, 5th, and 7th year at an interest rate of 9% compounded semi-annually. Payment of P220 at the end of 2nd, and 6th year at an interest rate of 7.5% compounded quarterly. Withdrawal of P640 at the end of 3rd, and 5th year at an interest rate of 5% compounded semi-quarterly. Determine the following: 1. Total present worth of all cash flows. Is the sum a positive net cash flow or a negative net cash flow? 2. Future worth of all the payments after 10 years? 3. To balance the cash flows, what amount should be added at the end of the 4th year at an interest rate of 10% compounded annually
A series of cash flows are established on an account as listed below: Payment of P375 at the end of the 2nd, 5th, and 7th year at an interest rate of 9% compounded semi-annually. Payment of P220 at the end of 2nd, and 6th year at an interest rate of 7.5% compounded quarterly. Withdrawal of P640 at the end of 3rd, and 5th year at an interest rate of 5% compounded semi-quarterly. Determine the following: 1. Total present worth of all cash flows. Is the sum a positive net cash flow or a negative net cash flow? 2. Future worth of all the payments after 10 years? 3. To balance the cash flows, what amount should be added at the end of the 4th year at an interest rate of 10% compounded annually
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A series of cash flows are established on an account as listed below:
Payment of P375 at the end of the 2nd, 5th, and 7th year at an interest rate of 9% compounded semi-annually.
Payment of P220 at the end of 2nd, and 6th year at an interest rate of 7.5% compounded quarterly.
Withdrawal of P640 at the end of 3rd, and 5th year at an interest rate of 5% compounded semi-quarterly.
Determine the following:
1. Total present worth of all cash flows. Is the sum a positive net cash flow or a negative net cash flow?
2. Future worth of all the payments after 10 years?
3. To balance the cash flows, what amount should be added at the end of the 4th year at an interest rate of 10% compounded annually?
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