Question

1. Find the present values of the following cash flow streams at a 10% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent.

   0

   1

   2

   3

   4

   5

   Stream A	$0	$100	$350	$350	$350	$300
   Stream B	$0	$300	$350	$350	$350	$100

   Stream A: $  

   Stream B: $  

2. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar.

   Stream A: $  

   Stream B: $  

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $12,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 7% in the future.

1. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

3. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

   Annual withdrawals if she retires at 65: $

   Annual withdrawals if she retires at 70: $

Answer 1

a

Stream A
Discount rate	0.1
Year	0	1	2	3	4	5
Cash flow stream	0	100	350	350	350	300
Discounting factor	1	1.1	1.21	1.331	1.4641	1.61051
Discounted cash flows project	0	90.90909	289.2562	262.9602	239.05471	186.2764
NPV = Sum of discounted cash flows
NPV Stream A =	1068.46
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor
Stream B
Discount rate	0.1
Year	0	1	2	3	4	5
Cash flow stream	0	300	350	350	350	100
Discounting factor	1	1.1	1.21	1.331	1.4641	1.61051
Discounted cash flows project	0	272.7273	289.2562	262.9602	239.05471	62.09213
NPV = Sum of discounted cash flows
NPV Stream B =	1126.09
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor

b

Stream A
Discount rate	0
Year	0	1	2	3	4	5
Cash flow stream	0	100	350	350	350	300
Discounting factor	1	1	1	1	1	1
Discounted cash flows project	0	100	350	350	350	300
NPV = Sum of discounted cash flows
NPV Stream A =	1450
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor
Stream B
Discount rate	0
Year	0	1	2	3	4	5
Cash flow stream	0	300	350	350	350	100
Discounting factor	1	1	1	1	1	1
Discounted cash flows project	0	300	350	350	350	100
NPV = Sum of discounted cash flows
NPV Stream B =	1450
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor

Please ask remaining parts seperately