Question
In: Finance
It is the end of 2020. You plan to complete a Ph.D. in 5 years. Your...
It is the end of 2020. You plan to complete a Ph.D. in 5 years. Your favorite uncle has promised to help you with your school expenses by giving you the following amounts for Christmas:
| Year | 2021 | 2022 | 2023 | 2024 | 2025 |
| Cash flow | 1,200 | 1,600 | 1,800 | 2,000 | 2,200 |
Your uncle is fairly wealthy and very reliable. You currently have $10,000 in a savings account paying an annual interest rate of 8%.
Questions:
1. Create an Excel spreadsheet showing the years and cash flows as in the table above, then add a row that shows the number of years from now and another row that shows the present value of each cash flow. What is the sum of present values?
2. You also want to know how much each gift will be worth in 2025 if you save it. Add another row to your spreadsheet and calculate the value of each cash flow in 2025. What is the sum of all future values?
3.What is the present value of the sum of future values calculated in the previous part?
4. Now assume that the interest rate is 6%. What is the present value of all the gifts?
5. Still assume that the interest rate is 6%. What is the future value of all the gifts?
6. Now assume that the interest rate is 12%. What is the present value of all the gifts?
7. Still assume that the interest rate is 12%. What is the future value of all the gifts?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Intro It is the end of 2019. You plan to complete a Ph.D. in 5 years....
Intro It is the end of 2019. You plan to complete a Ph.D. in 5
years. Your favorite uncle has promised to help you with your
school expenses by giving you the following amounts for Christmas:
Year 2020 2021 2022 2023 2024 Cash flow 1,000 1,600 1,800 2,000
2,200 Your uncle is fairly wealthy and very reliable. You currently
have $10,000 in a savings account paying an annual interest rate of
6%. Attempt 1/5 for 10 pts. Part 1 Create...
Intro It is the end of 2019. You plan to complete a Ph.D. in 5 years....
Intro
It is the end of 2019.
You plan to complete a Ph.D. in 5 years. Your favorite uncle has
promised to help you with your school expenses by giving you the
following amounts for Christmas:
Year
2020
2021
2022
2023
2024
Cash flow
1,000
1,600
1,800
2,000
2,200
Your uncle is fairly
wealthy and very reliable. You currently have $10,000 in a savings
account paying an annual interest rate of 6%.
Attempt 1/5 for 10 pts.
Part 1
Create...
Intro It is the end of 2019. You plan to complete a Ph.D. in 5 years....
Intro It is the end of 2019. You plan to complete a Ph.D. in 5
years. Your favorite uncle has promised to help you with your
school expenses by giving you the following amounts for Christmas:
Year 2020 2021 2022 2023 2024 Cash flow 1,000 1,600 1,800 2,000
2,200 Your uncle is fairly wealthy and very reliable. You currently
have $10,000 in a savings account paying an annual interest rate of
10%. Attempt 1/5 for 10 pts.
Part 1 Create...
You are about to graduate. You plan to continue your education at Harvard in 5 years....
You are about to graduate. You plan to continue your education
at Harvard in 5 years. Your plan is to save $5,500 a year,
beginning IMMEDIATELY. Overall, you are going to
deposit 5 times in your account that pays 6.3%, annually. How much
money will you have in your account 5 years from today? Include up
to two decimals in your answer.
A.
$34,333.25
B.
$43,433.87
C.
$33,155.24
D.
$23,511.15
E.
$32,200.23
you plan to save $500 monthly for 2 years earning 5%interest. how much will you end...
you
plan to save $500 monthly for 2 years earning 5%interest. how much
will you end up with?
At the end of each year for the first 5 years, Cecil and Norma DeMille plan...
At the end of each year for the first
5 years, Cecil and Norma DeMille plan to contribute $1,000 to their
daughter Sally's college fund. For the next 5 years they will
contribute $2,000 at the end of each year, and then increase that
amount to $3,000 until she turns 18 and is ready for college. What
amount will they have accumulated for Sally's college fund if the
account pays 6.35% annually?
Please be very thorough
with work and provide...
At the end of each of the next 8 years, you plan to put $25,000 in...
At the end of each of the next 8 years, you plan to put $25,000
in the bank. If the annual interest rate is 3%, what is the present
value of this planned savings stream? What will the bank balance be
at the end of the 8 year period? [Hint: once you know the present
value of the savings stream, it's easy to work out the future
value]
You plan on saving $12,300 at the end of each of the next 20 years and...
You plan on saving $12,300 at the end of each of the next 20
years and investing your savings at an annual interest rate of 8%.
At the end of year 20 you plan on retiring. You plan on leaving
your savings in investments yielding an annual rate of 8% and
withdrawing from savings a constant amount for the next 30 years
commencing at the end of your first year of retirement. How large a
withdrawal can you afford to...
45.You plan on saving $12,300 at the end of each of the next 20 years and...
45.You plan on saving $12,300 at the end of each of the next 20
years and investing your savings at an annual interest rate of 8%.
At the end of year 20 you plan on retiring. You plan on leaving
your savings in investments yielding an annual rate of 8% and
withdrawing from savings a constant amount for the next 30 years
commencing at the end of your first year of retirement. How large a
withdrawal can you afford to...
You spent $ 355 and you get $ 860 back at the end of 5 years....
You
spent $ 355 and you get $ 860 back at the end of 5 years. Use the
interest and interpolation tables by hand to determine the internal
rate of return. Displays the interpolation on the
spreadsheet.
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