What is your leadership style and how do you apply it in your everyday activities?
July 11, 2019
Module 02 Humanities Credit By Assessment
July 11, 2019

9.4 Find the following values assuming a regular, or ordinary, annuity:

                                a The present value of $400 per year for ten years at 10 percent

                                                = $400 x 6.145

                                                = $2,458.00

b The future value of $400 per year for ten years at 10 percent

                                                = $400 x 15.937

                                                = $6,374.80

c The present value of $200 per year for five years at 5 percent

                                                = $200 x 4.329

                                                = $865.80

d The future value of $200 per year for five years at 5

                                                = $200 x 5.526

                                                = $1,105.20

9.6 Consider the following uneven cash flow stream:

                Year                                Cash Flow               PV Factor                    Present Value

0                                         $0                        

1                                        250                        0.909                           227.25

                2                                        400                        0.826                           330.40

                3                                        500                        0.751                           375.50

                4                                        600                        0.683                           409.80

                5                                        600                        0.621                           372.60

                                                                                                Total                                                       1,715.55

                                                                                                                                                                =======

 a What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent? 

                                                                                $1,715.55

9.7 Consider another uneven cash flow stream:

 9.7

Year Ca Year                                Cash Flow               PV Factor                    Present Value

0                                         $2,000                  1.000                           2,000.00

1                                           2,000                  0.909                           1,818.00

                2                                                 0                   0.826                                  0.00

                3                                           1,500                  0.751                             1,126.50

                4                                           2,500                  0.683                           1,707.50

                5                                           4,000                  0.621                           2,484.00

                                                                                                Total                                                       9,136.00

                                                                                                                                                                =======

a. What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 10  percent?

                                                                $9,136.00

b What is the value of the cash flow stream at the end of Year 5 if the cash flows are invested in an account that pays 10 percent annually

Year                                Cash Flow                           FV Factor                    Future Value

0                                         $2,000                  1.611                           3,222.00

1                                           2,000                  1.464                           2,928.00

                2                                                 0                   1.331                                  0.00

                3                                           1,500                  1.210                             1,815.00

                4                                           2,500                  1.100                           2,750.00

                5                                           4,000                  1.000                          4,000.00

                                                                                                Total                                                       14,715.00

                                                                                                                                                                =======

9.9 Assume that you just won $35 million in the Florida lottery, and hence the state will pay you 20 annual payments of $1.75 million each beginning immediately. If the rate of return on securities of similar risk to the lottery earnings (e.g., the rate on 20-year U.S. Treasury bonds) is 6 percent, what is the present value of your winnings?

            Present Value of Annuity of Annuity of $1,750,000 for 20 years

                        Immediate Payment                                                    $ 1,750,000

                        Annuity for 19 years at 6% (1,750,000 x 11.158)      $19,526,500

                                    Total                                                                $21,276,500

                                                                                                            =========

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