Question

discount rate is 10%

1.A stream of cash flows that pays $100 every year for 10 year. The first cash flow is received at t=3 and you will receive additional $1000 at the end of the 12 years.,What is the PV at time zero? what is the FV at time 12?

2.A stream of cash flows that pays $100 every year for 10 year. The first cash flow is received at t=3.What is the PV at time zero? what is the FV at time 12?

3.A stream of cash flows that pays $100 every year for 10 year. The first cash flow is received at t=1 and you will receive additional $1000 at t=5.What is the PV at time zero? what is the FV at time 10

4.A stream of cash flows that pays $100 every year for 10 year. The first cash flow is received at t=1 .What is the PV at time zero? What is the FV at time 10?

5.A stream of cash flows that pays $100 every year for 10 year. The first cash flow is received at t=1 and you will receive additional $1000 at the end of the 10 years.,What is the PV at time zero? what is the FV at time 12?

Answer 1

1.

Present Value at time zero = [ $100 * 1/(1.1) ^ 3+$100 * 1/(1.1) ^4+$100 * 1/(1.1) ^5+$100 * 1/(1.1) ^6+$100 * 1/(1.1) ^7+$100 * 1/(1.1) ^8+$100 * 1/(1.1) ^9+$100 * 1/(1.1) ^10+$100 * 1/(1.1) ^11+$1100 * 1/(1.1) ^12]

=$ 826.45

Hence the correct answer is $ 826.45

Future Value = Present Value * ( 1+ Rate of interest ) ^ Time

= $ 826.45* ( 1+10%) ^ 12

= $ 2,593.75

Hence the correct answer is $ 2,593.75

2.

Present Value at time zero = [ $100 * 1/(1.1) ^ 3+$100 * 1/(1.1) ^4+$100 * 1/(1.1) ^5+$100 * 1/(1.1) ^6+$100 * 1/(1.1) ^7+$100 * 1/(1.1) ^8+$100 * 1/(1.1) ^9+$100 * 1/(1.1) ^10+$100 * 1/(1.1) ^11+$1100 * 1/(1.1) ^12]

=$ 826.45

Hence the correct answer is $ 826.45

Future Value = Present Value * ( 1+ Rate of interest ) ^ Time

= $ 826.45* ( 1+10%) ^ 12

= $ 2,593.75

Hence the correct answer is $ 2,593.75

3.

Present Value at time zero = [ $100 * 1/(1.1) ^ 1+$100 * 1/(1.1) ^2+$100 * 1/(1.1) ^3+$100 * 1/(1.1) ^4+$1100 * 1/(1.1) ^5+$100 * 1/(1.1) ^6+$100 * 1/(1.1) ^7+$100 * 1/(1.1) ^8+$100 * 1/(1.1) ^9+$100 * 1/(1.1) ^10]

=$ 1,235.38

Hence the correct answer is $ 1,235.38

Future Value = Present Value * ( 1+ Rate of interest ) ^ Time

= $ 1,235.38* ( 1+10%) ^ 10

= $ 3,204.26

Hence the correct answer is $ 3,204.26

4.

Present Value at time zero = [ $100 * 1/(1.1) ^ 1+$100 * 1/(1.1) ^2+$100 * 1/(1.1) ^3+$100 * 1/(1.1) ^4+$100 * 1/(1.1) ^5+$100 * 1/(1.1) ^6+$100 * 1/(1.1) ^7+$100 * 1/(1.1) ^8+$100 * 1/(1.1) ^9+$100 * 1/(1.1) ^10]

=$ 614.46

Hence the correct answer is $ 614.46

Future Value = Present Value * ( 1+ Rate of interest ) ^ Time

= $614.46 * ( 1+10%) ^ 10

= $ 1,593.75

Hence the correct answer is $ 1,593.75

5.

Present Value at time zero = [ $100 * 1/(1.1) ^ 1+$100 * 1/(1.1) ^2+$100 * 1/(1.1) ^3+$100 * 1/(1.1) ^4+$100 * 1/(1.1) ^5+$100 * 1/(1.1) ^6+$100 * 1/(1.1) ^7+$100 * 1/(1.1) ^8+$100 * 1/(1.1) ^9+ $ 1100 * 1/(1.1) ^10]

=$ 1,000.00

Hence the correct answer is $

Future Value = Present Value * ( 1+ Rate of interest ) ^ Time

= $ 1,000 * ( 1+10%) ^ 12

= $ 3,138.43

Hence the correct answer is $ 3,138.43