Computation of present value of cash flows

Assignment Help Finance Basics

Reference no: EM1312705

I will pay you $40,000 at the end of this year, $30,000 at the end of each of the next three years, and then $20,000 at the end of the fifth year. The interest rate is 5.0% per year.

1. What is the present value of this cash stream?

2. If I borrow the $40,000 at the beginning at 5%, and then reinvest all the proceeds, what is the future value of this cash stream on the date of the last payment?

Reference no: EM1312705

Questions Cloud

Standard normal random variable : Find the value of the standard normal random variable z, called z 0 such that:

Purpose the investment related asset and stockholders : Journalize the entries to record the preceding transitions and purpose the investment related asset and stockholders equality balance sheet disclosures for Roman Products.

Estimate the average speed distance, for the trip : An automobile travels on a straight road for 40.0 km [E] at 30.0 (km/h). It then continues in the same direction for another 40.0 km [E] at 60 (km/h). Estimate the average speed, distance, displacement, & average velocity for the trip.

Illustration of impacts of given events : Illustrate each of the following events using a demand and supply diagram for bananas.

Computation of present value of cash flows : Computation of present value of cash flows and What is the present value of this cash stream

Estimating the standard z-scores : Suppose the random variable x is best described by a normal distribution with µ = 24 and σ = 2.7. Find the z-score that corresponds to each of the following x values.

Evaluate the total interest expense for 2010 : Evaluate the total interest expense for 2010 and Will the bond proceeds always be less that the face amount of the bonds when the contract rate is less that market rate of interest?

Effect of price flooring and price ceiling on demand : Using the following schedule, define the equilibrium price and quantity. Explain the situation at price of $10. What will occur? Discuss the situation at a price of $2. What will occur?

Distribution-approximately normal : The mean maximum oxygen uptake for elite athletes has been found to be 80 with a standard deviation of 8.1. Assume that the distribution is approximately normal.

User Account

All Pages