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a)
To determine: The
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be calculated by adding the cash flow of every stream.
b)
To determine: The present value.
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.
c)
To determine: The present value.
Introduction:
The present value is an amount that an individual has to make for an investment at present in order to generate the cash flow in future. The present value of the cash flows can be computed by adding the cash flow of every stream.
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Chapter 4 Solutions
EBK CORPORATE FINANCE
- 6.If the current value of $1000 received five years from now is $680.50, what is the assumed annual interest rate? 7.If the current value of $1000 received in each of the next five years starting one year from now is $3889.65, what is the assumed annual interest rate? 8.$1000 is deposited in a bank earning 8% compounded annually. What will be the balance at the end of ten years? What will be the ending balance assuming money is compounded quarterly?arrow_forwardWhat is the present value of $8,000 received 10 years from today when the interest rate is 4% per year? (Round to the nearestdollar.) 20 years from today when the interest rate is 8% per year? (Round to the nearestdollar.) 5 years from today when the interest rate is 2% per year? (Round to the nearestdollar.)arrow_forwardCalculate the future value of $2,000 in a. 3 years at an interest rate of 10% per year. b. 6 years at an interest rate of 10% per year. c. 3 years at an interest rate of 20% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?arrow_forward
- If the current rate of interest is 10% and interest is compounded semiannually, what is the present valueof receiving $10,000 at the end of 7 years?Question 3lf the current interest rate is 12% and interest is compounded semiannually, what is the present value ofreceiving $5,000 each year for 10 years?arrow_forwardWhat is the total future value ten years from now of $400 received in 1 year, $350 received in 2 years and $900 received in 8 years if the interest rate is 5% per year? O a $2,047.15 O b. $2,100.11 Oc $2,299.15 Od. $2,129.89 O e. $2.254.44arrow_forwardCalculate the future value of $5,000 in a. Four years at an interest rate of 5% per year. b. Eight years at an interest rate of 5% per year. c. Four years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? a. Four years at an interest rate of 5% per year. The future value of $5,000 in 4 years at an interest rate of 5% per year is $______.(Round to the nearest dollar)arrow_forward
- Calculate the future value of $4,000 in a. Four years at an interest rate of 5% per year. b. Eight years at an interest rate of 5% per year. c. Four years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? a. Four years at an interest rate of 5% per year. The future value of $4,000 in 4 years at an interest rate of 5% per year is $ (Round to the nearest dollar.) b. Eight years at an interest rate of 5% per year. The future value of $4,000 in 8 years at an interest rate of 5% per year is $ (Round to the nearest dollar.) c. Four years at an interest rate of 10% per year. The future value of $4,000 in 4 years at an interest rate of 10% per year is $ (Round to the nearest dollar.)arrow_forwardWhat is the present value of $3,000 paid at the end of each of the next 77 years if the interest rate is 10% per year? The present value is (Round to the nearest cent.) ...arrow_forwardSuppose you are going to invest $11,000 per year for six years. The appropriate interest rate is 9 percent. What is the future value if the payments are made on the last day of the year? What if the payments are made on the first day of the year? a) $82,756.68; $90,204.78 b) $90,204.78; $82,756.68 c) $49,345.10; $53,786.16 d) $53,786.16; $49,345.10arrow_forward
- = Calculate the future value of $8,000 in a. Four years at an interest rate of 8% per year. b. Eight years at an interest rate of 8% per year. c. Four years at an interest rate of 16% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? ...arrow_forwardWhat is the present value of $65,000 in six years, if the relevant interest rate is 8.1%?arrow_forwardConsider a $5,000 deposit earning 10 percent interest per year for 10 years. What is the future value, how much total interest is earned on the original deposit, and how much is interest earned on interest?arrow_forward