Determine the pw of the cash flows

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Gradient Series and Effective interest rates.

Question 1. Given the cash flows below, drawing the cash flow diagram, determine the future worth @ an interest rate of 8% compounded annually.Answer: FW = $28,869.76

Year                 1     2      3             4
Cash Flow in $  -5K   -6K     -7K          -8K

Question 2. Determine the PW of the cash flows given in table below for an interest rate of 18%. Show the cash flow diagram. Answer: PW = $172.48

Year                 0     1  2   3   4    5  6     7    8    9  10
Cash Flow in $ 100   80 60 40  20   0 -20 -40 -60 -80 -100

Question 3. Acument Global Technologies is exploring investment opportunities for $10 M. The company would like to maximize the return on this investment. Four investment opportunities being explored are for a period of 10 years. Help the company choose the best investment opportunity.
a. 10% compounded quarterly. F= $26,850,000
b. 9.85% compounded daily. F= $26,774,561
c. 9.95% compounded monthly. F=$26,936,511

Question 4. A loan of 10,000 is to be repaid a nominal interest rate of 12% year.
Determine,
a. the effective interest rate if loan is paid back every six months. 12.36%
b. the effective interest rate if loan is paid back every three months.12.55%
c. the effective interest rate if loan is paid backevery month.12.68%
d. the effective interest rate if loan is paid back biweekly 12.72%
e. the. effective interest rate if loan is paid back every week.12.73%

Reference no: EM132453919

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