All ways of evaluating series of cashflows over time

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1- Annual worth, net present value, and internal rate of return are all ways of evaluating a series of cashflows over time. What are the uses, advantages and disadvantages of each of these figures?

2- Mal has bequeathed his spaceship Serenity to his second in command, Zoe, upon his death. Zoe knows that Mal's weekly hairbreadth escapes from mortal danger cannot continue forever, and she estimates he has four years to live. Given that Serenity is now worth $27,000, what is the present value of her inheritance of the ship?

Zoe has a discount rate of 38%.

3- Mal arranges financing for a load of contraband weapons he plans to sell to the rebels. The terms of the loan are as follows:

The bank will provide Mac $62,000 today. Each year, for the next 35 years, Mal must pay the bank $5,300. He has a discount rate of 11%.

What is the net present value of this finance arrangement to Mal?

4- Shepherd Book invests $70,000 in a pension. During the first year, the pension will pay him $10,000, the second year $20,000, the third year $30,000, and the fourth year $40,000, and so on. The pension lasts for 8 years.

What is the annual worth of this pension to Rev. Book, given that he has a discount rate of 10% ? What is the internal rate of return?

Reference no: EM131868762

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