Question

In: Finance

Calculate 7 ratios of your choosing 1 2 3 4 5 6 7 Show work. A)...

Calculate 7 ratios of your choosing

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2

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7

Show work.

A) Calculate the PV of a single payment of $1,000,000 that you are receive in 5 years and that has an interest rate of 5%.

B) Calculate the PV of a single payment of $21,500,000 that you are receive in 5 years and that has an interest rate of 8%.

C) Calculate the PV of a single payment of $4,000,000 that you are receive in 5 years and that has an interest rate of 12%.

D) Calculate the FV of a single payment of $1,000,000 that you are receive in 5 years and that has an interest rate of 5%.

E) Calculate the FV of a single payment of $21,500,000 that you are receive in 5 years and that has an interest rate of 8%.

F) Calculate the FV of a single payment of $4,000,000 that you are receive in 5 years and that has an interest rate of 12%.

G) Define a lump sum.

H) Define an annuity and give an example.

Solutions

Expert Solution

A)

Present value FV×(1÷(1+r)^n)
Here,
1 rate per annum 5.00%
2 Number of years                                              5
3 Number of compoundings per per annum                                              1
4 = 1÷3 rate per period ( r) 5.00%
5 = 2×3 Number of periods (n)                                              5
Future value (FV) $                         1,000,000
Present value $                       783,526.17
1000000*(1/(1+5%)^5)

B)

Present value FV×(1÷(1+r)^n)
Here,
1 rate per annum 8.00%
2 Number of years                                              5
3 Number of compoundings per per annum                                              1
4 = 1÷3 rate per period ( r) 8.00%
5 = 2×3 Number of periods (n)                                              5
Future value (FV) $                       21,500,000
Present value $                 14,632,538.74
21500000*(1/(1+8%)^5)

C)

Present value FV×(1÷(1+r)^n)
Here,
1 rate per annum 12.00%
2 Number of years                                              5
3 Number of compoundings per per annum                                              1
4 = 1÷3 rate per period ( r) 12.00%
5 = 2×3 Number of periods (n)                                              5
Future value (FV) $                         4,000,000
Present value $                   2,269,707.42
4000000*(1/(1+12%)^5)

D)

Future value PV×(1+r)^n
Here,
1 Interest rate per annum 5.00%
2 Number of years                                        5
3 Number of compoundings per per annum                                        1
1÷3 Interest rate per period ( r) 5.00%
2×3 Number of periods (n)                                        5
Present value (PV) $                   1,000,000
Future value $             1,276,281.56
1000000*(1+5%)^5

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