Whenever the interest charge for any interest period (a year, for example) is based on the remaining principal amount plus any accumulated interest charges up to the beginning of that period, the interest is said to be [ Select] [ Select] Refers to an infinite amount of time. In economics, it is a constant stream of identical cash flows with no end. [ Select ] The estimated value of a property at the end of its useful life. Solves for the interest rate that equates the equivalent worth of an alternative's cash inflows to the equivalent worth of cash outflows. [ Select ] [ Select ] Directly takes into account the interest rate external to a project at which net cash flows generated or required by the project over its life can be reinvested or borrowed, Previous
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- For the following exercise, use the compound interest formula, A(t) = P 1 + r n nt , where money is measured in dollars.After a certain number of years, the value of an investment account is represented by the expression 10,950 1 + 0.03 2 24 . How many years had the account been accumulating interest? yr"Assume that the interest rate is 8.5% per year and you expect to receive the following stream of annual cash flows (The year 0 cash flow occurs today and the year 4 cash flow occurs exactly 4 years from today): (Year 0: $15,100); (Year 1: $21,100); (Year 2: $12,700): (Year 3: $19,250): (Year 4: $9,550); What is the current Present Value (PVO) of the stream of cash flows?" a)"$68,013- b)"$67,297" c)"$77,700 d)"$62,025" e)$64,399 f)$68,643"A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next four years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 $250,000 $37,500 $180,000 $300,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? $650,014 $1,475,000 $467,500 $1,692,500 Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments: Description Uneven Cash Flows Annuity Payments You recently moved to a new apartment and signed a contract to pay monthly rent to your…
- If the rate of interest that your investment can earn on a 2-year investment is zero, which of the following statements is NOT CORRECT? * a. All of the statements are correct. b. The payment for the use of your money for two years is zero. c. The future value of your investment is higher than your present value at the end of the investment period. d. You will receive the same amount you invested at the beginning of the 2-year period at the conclusion or maturity of the investment.Find the value of x that makes the equivalent annual worth in years 1 through 10 equal to $800 per year. Use an interest rate of 10% per year. The cash flows in year 0 and year 10 has an unknown value x, and 1 through 9 has an annual worth of $800. The value of x is determined to be $.....For each of the following situations involving single amounts, solve for the unknown (?). Assume that interest is compounded annually. (i = interest rate, and n = number of years) Present Value Future Value i n1. ? $ 40,000 10% 52. $ 36,289 65,000 ? 103. 15,884 40,000 8 ?4. 46,651 100,000 ? 85. 15,376 ? 7 20
- A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 $250,000 $37,500 $480,000 $300,000 $550,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? $1,650,000 $767,500 $1,410,275 $2,167,500 Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments: Description Uneven Cash Flows Annuity Payments Debbie has been donating 10% of her salary at the end of every year…Consider the following cash flows: Year Cash Flow 2 $ 22,800 3 40,800 5 58,800 Assume an interest rate of 9.6 percent per year. a. If today is Year 0, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year 0, what is the future value of the cash flows ten years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Time value of MoneyPart-I, Mr. Zigong wishes to know about the future values of the single cash flow deposited today that will beavailable at the end of the deposit period if the interest is compounded annually at the rate specified oversome specific period. For example, the situation for the first case is that single cash flow is 200$, interestrate is 5%, and deposit period is 20 years. Under second case, single cash flow is 4500$, interest rate is8%, and deposit period is 7 years. Whereas under third case, single cash flow is 10,000$, interest rate is9%, and deposit period is 10 years. In addition, under fourth case, single cash flow is 25,000$, interestrate is 10%, and deposit period is 12 years. Besides, under last case, single cash flow is 37000$, interestrate is 11%, and deposit period is 5 years, respectively. Part-II, The significance of present value is quite vital in the financial world of the business. Calculate the present value of the cash…
- What is the future value of this cash flow stream at the beginning of year 7 : $100 at the end of 1 year, $150 after at the end of year 2,200 at the beginning of year 3, $300 at the end of year 3, and 500 at the beginning of year 5 assuming the appropriate interest rate is 15%? ( The answer is 604.75 but i dont know how it came) Please show the calculations manually by formula and not by excelAssume the returns from holding an asset are normally distributed. Also assume the average annual return for holding the asset a period of time was 15.3 percent and the standard deviation of this asset for the period was 33.2 percent. Use the NORMDIST function in Excel® to answer the following questions. a. What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) b. What is the approximate probability that your money will triple in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616.)For how long would P1,000,000 have to be invested at 5% simple interest for it to double its value? (Note: Disregarding reinvestments and inflation). Answer in years