You expect to receive $1,000 in one year, and $4,000 in three years. If the interest...

You expect to receive $1,000 in one year, and $4,000 in three years. If the interest rate is 12% compounded monthly, what is the present value of all cash flows?

Group of answer choices

$3,739.98

$5,600.00

$6,739.71

$3,683.15

Solutions

Expert Solution

Effective rate =(1+12%/12)^12-1 =12.6825%
PV of Cash flows =1000/(1+12.6825%)+4000/(1+12.6825%)^3 =3682.15 (Option d is correct option)

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You expect to receive a one-time payment of $1,000 in 10 yearsand the second payment...

You expect to receive a one-time payment of $1,000 in 10 years and the second payment of $1,500 in 15 years. The annual interest rate is 9%.Part 1What is the present value of the combined cash flows?Part 2If you invest the amount that you'll receive in 10 years and include the cash flow in year 15, how much money will you have in year 15?Part 3If you invest the amount found in part 1 for 10 years, how much will...

You receive $4,000 every three months beginning three months from today for 7 years and an...

You receive $4,000 every three months beginning three months from today for 7 years and an additional $1,200 7 years from today. If the interest rate is 3.0% (EAR), which of the following is closest to the present value (PV) of this stream of cash flows? How should I solve this using the hp10bii+ calculator? If you could show me the steps that would be great!

If you expect to receive $100 in one year from now, $200 two years from now,...

If you expect to receive $100 in one year from now, $200 two years from now, and $150 three years from now, How much this cash flow is worth today if the interest rate is 10%

You will receive $12000 over the next 4 years. You can expect a 12% interest rate....

You will receive $12000 over the next 4 years. You can expect a 12% interest rate. You will receive $6000 in year 1 and your amount will decrease by $2000 each year. What is the present value of your money?

a) You invest $117 today and expect to receive $183 in 13 years. What interest rate...

a) You invest $117 today and expect to receive $183 in 13 years. What interest rate are you expecting to earn? (Put rate in 4 decimal places.) b) You invest $291 at the end of each year for 25 years in an account earning 6.9%. How much do you expect to be able to withdraw in 25 years? (Note this is an ordinary annuity.)

Would you rather receive $1,000 a year for 10 years or $800 a year for 15...

Would you rather receive $1,000 a year for 10 years or $800 a year for 15 years if: Present Value = FV after t periods / (1+r)^t The interest rate is 5 percent? Response and rationale: Present value = PV = future value / The interest rate is 20 percent? Response and rationale: Why do your answers to “(a)” and “(b”) differ? Response:

$4,000 is invested at 8%. Equal payments will be received one year and three years from...

$4,000 is invested at 8%. Equal payments will be received one year and three years from now. Determine the size of the payment if the focal date is: A. Now. B. One year hence. C. Three years hence.

You are examining three bonds with a par value of $1,000 (you receive $1,000 at maturity)...

You are examining three bonds with a par value of $1,000 (you receive $1,000 at maturity) and are concerned with what would happen to their market value if interest rates (or the market discount rate) changed. The three bonds are Bond A—a bond with 6 years left to maturity that has an annual coupon interest rate of 9 percent, but the interest is paid semiannually. Bond B—a bond with 9 years left to maturity that has an annual coupon interest...

You are scheduled to receive a $1,000 cash flow in one year, a $1,500 cash flow...

You are scheduled to receive a $1,000 cash flow in one year, a $1,500 cash flow in two years, and pay a $700 payment in three years. If interest rates are 8 percent per year, what is the combined present value of these cash flows? (Round your answer to two decimal places.)

You expect to receive $14,500 at graduation in four years. You plan on investing it at...

You expect to receive $14,500 at graduation in four years. You plan on investing it at 10 percent until you have $84,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Number of years

Subjects