Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform annuity amount A? If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform gradient amount G? What is the uniform annual equivalent if the interest rate is 12% per year? What is the future equivalent if the interest rate is 12% per year? What is the present equivalent if the interest rate is 12% per year?
Q: Average Rate of Return, Cash Payback Period, Net Present Value Method Bi-Coastal Railroad Inc. is…
A: Net present value of a project is calculated by deducting the cost of project from the present value…
Q: The following cash flows are all end-of-period values. .. 400 200 400 .. 300 2 3..... 10 Use a 10%…
A: The computation of equivalent annual series of end of the year payment is as follows:
Q: Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36 for years 1 to 5. If the…
A: Cashflows: Year 1 = $8,000 Year 2 = $15,000 Year 3 = $22,000 Year 4 = $29,000 Year 5 = $36,000
Q: Suppose you expect to receive the following future cash flows at the end of the years indicated.…
A: Future value- Year FV 2 $2300 4 $5200 5 $2600 9 $8000…
Q: For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an…
A: The given problem can be solved using MIRR function in excel.
Q: If the interest rate is 12% per year compounded annually, a) what is the equivalent present worth of…
A: The present worth analysis is an analysis which takes into account the present worth of the benefits…
Q: For the given cash flow, if the equivalent uniform annual payments is $2000 and the interest rate is…
A: Uniform annual payment = $2000 i = 4% = 0.04 Period = 9 years Future value of annuity is calculated…
Q: Consider a series of cash flows that starts with $1,000 at the end of time 1 and decreases by $20…
A: Use the table below: PV of a cash flow = cash flow at time n /(1+ rate)^n Cost 8.00000%…
Q: A cash flow at time zero (now) of $9,982 is equivalent to another cash flow that is an EOY annuity…
A: Zero time cash flow = End of the year annuity amount × ((P/A, i5)
Q: What is the payback period for the following set of cash flows? (Round your answer to 2 decimal…
A: Payback period is the time period in which the initial cash flows will be recovered in absolute…
Q: What is the present value of a perpetuity stream of cash flows that pays P1,000 at the end of year…
A: present value of a perpetuity stream of cash flows = cash flows at end of year 1/(Discount rate -…
Q: Calculate the future (terminal) value of each stream at the end of year 5 with a compound annual…
A: Future Value: Future value is the value of an asset after a particular period of time, considering…
Q: Consider a situation, where (a) the equal-payment cash flow of $1,500 in constant dollars over three…
A: Constant dollar equal payment cash flow $1500 for three years The inflation rate of 4% An interest…
Q: What uniform series over the interval [1,8] will be equivalent to a uniform series of $10,000 cash…
A: Uniform series means the uniform cash flows which are going to generate over the years from a…
Q: What is the value of K on the left-hand cash-flow diagram that is equivalent to the right-hand…
A: The value received by an individual today is of more worth than that of receiving the exact amount…
Q: Consider a uniform series of cash flows. The first cash flow of $10,000 occurs at time 10 and the…
A:
Q: What is the present value of a perpetual stream of cash flows that pays $5, 000 at the end of year…
A: Cashflows = $5,000 Growth rate = 4% Discount rate = 11%
Q: Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If…
A: Given cash flows Cashflows: Year 1 = $8,000 ;Year 2 = $15,000; Year 3 = $22,000 ; Year 4 = $29,000;…
Q: Solve, a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for…
A: a) The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…
Q: Suppose that a geometric gradient begins with $17,000 at the end of 3 years and increases by 12%…
A: Present worth of the cash flows is the present value of the money today as the value of money in the…
Q: What single payment at the beginning of year 2 is equivalent to an equal annual series of payments…
A: First payment is made at the end of Year 3 and will be made till Year 8. Hence, a total of 6 payment…
Q: Find the Modified Internal Rate of Return (MIRR) for the following annual series of cash flows,…
A: Modified internal rate of return assumes that positive cash flows are invested at a firm’s cost of…
Q: Consider the following two cash flow series of payments: Series A is a geometric series increasing…
A: Total amount paid should be equal to the cost. Value of X will be equal to the sum of PV of future…
Q: What is the present value of the following cash-flow stream if the interest rate is 12%? You receive…
A: In the given question we require to calculate the present value of the stream of cashflows.
Q: What is the present value of a perpetual stream of cash flows that pays $2,500 at the end of year…
A: Perpetuity is a stream of identical cash flows with no end. It is a type of payment that is both…
Q: What is the present value of a perpetual stream of cash flows that pays $5, 000 at the end of year…
A: Perpetuity is a stream of identical cash flows with no end. It is a type of payment that is both…
Q: A cash flow series is described by the following: $10,000 + $250(t), where t is the number of…
A: Present Worth means the current value of the future stream of cash flows at a specific rate of…
Q: What uniform annual series of cash flows over a 12-year period is equivalent to an investment of…
A: PVA=PMT 1+rn-1/r (1+r)n Present value annuityFVA=PMT1+rn-1/r Future value…
Q: Determine the present equivalent value of the cash-fow diagram shown below when the annual interest…
A: Present worth is related to the time value of the money. It shows that the worth of the money in…
Q: Find the value of the unknown quantity, P0, that establishes equivalence in the cash-flow diagram…
A: Information Provided: Year 1 cashflow = 1400 Year 1 cashflow = 1100 Year 1 cashflow = 800 Year 1…
Q: What is the equivalent uniform annual payment for the following cash flows if the interest rate is…
A: The total payment is calculated by adding payments made in each year. Year Annual payment 1…
Q: Consider two streams of cash flows, A and B. Stream A is expected to have three cash [5] flows at…
A: In order to decide which streams of income would be preferable, one need to calculate the present…
Q: for Econco is expected to be $100 at Year 1 (which is one year from today). $125 at Year 2, and $150…
A: We need to use present value formula here Present value =Future Value/(1+Discount rate)number of…
Q: What is the future value of a stream of $800 cash receipts, each to be received at the beginning of…
A: Given data; payment amount = $800 interest rate = 10% number of years = 4
Q: Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are…
A: The future value can be calculated as follows :
Q: Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If…
A: The annuity cashflow = A= 8000 and uniform gradient = G = 7000, calculations are shown below.
Q: Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If…
A: Year Cash Flows($) 1 8000 2 15000 3 22000 4 29000 5 36000
Q: What uniform series over the interval [11,20] will be equivalent to a uniform series of $10,000 cash…
A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…
Q: Consider two streams of cash flows, A and B. Stream A is expected to have three cash flows at the…
A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…
Q: Find IRR
A: Internal Rate of Return (IRR) is a capital budgeting technique that evaluates the proposed projects…
Q: Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EOY one is…
A: Calculation of p0 The value of P0 can be calculated by using the following formula P0=…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Define effective annual rate (EAR) with examples. Differentiate between annuity cash flows and mixed stream with exampleConsider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
- 20. What is X in the formula: FV = X(1+r) ? Select one: a. The future value of an annuity with X cash flows b. The present value of a single cash flow in one period's time c. The future value of a single cash flow in one period's time d. The present value of an annuity with X cash flowsConsider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)What is the equivalent uniform series value (A) for the following cash flow? Pick the closest answer. The interest rate is 5%.
- 7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions. A. Which of the following statements about annuities are true? Check all that apply. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. B. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) C. Luana loves shopping…Describe the essential differences between the following cash flow streams: Annuity versus perpetuity Annuity due versus ordinary annuity Illustrate with an example each.7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) Katie had a high monthly food bill…
- 7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity due. When equal payments are made at the beginning of each period a certain time period, they are treated as ordinary annuities. An ordinary annuity of equal time earns less interest than an annuity due. Annuities are structured to provide fixed payments for a specified period of time. Which of the following is an example of an annuity? O A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time O An investment in a certificate of deposit (CD) Katie had a high monthly food bill before she decided to cook at home…Consider two assets with the following cash flow streams:Asset A generates $4 at t=1, $3 at t=2, and $10at t=3. Asset B generates $2 at t=1, $X at t=2, and $10at t=3.Suppose X=6 and the interest rate r is constant. (a)For r=0.1, calculate the present value of the two assets. (b)Determine the set of all interest rates {r} such that asset A is more valuable than asset B. (c)Draw the present value of the assets as a function of the interest rate. (d)Suppose r=0.2.Find the value X such that the present value of asset B is 12. (e)Suppose the (one-period) interest rates are variable and given as follows: r01=0.1, r12=0.2, r23=0.3. Calculate the yield to maturity of asset A.Direction: Define, draw the cash flow diagram, and write the general formula of the following: ANNUITY 1. Ordinary Annuity a) Sum/Future of Ordinary Annuity b) Present Worth of Ordinary Annuity 2. Annuity Due 3. Deferred Annuity