Reference no: EM131848658

Question: 1. Calculate the present value (PV ) of a cash inflow of $500 in one year, and a cash inflow of $1,000 in 5 years, assuming a discount rate of 15%.

2. Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year, assuming a discount rate of 10%.

3. What is the present value of a perpetual stream of annual cash flows of $100, with the first cash flow to be received in one year, assuming a discount rate of 8%?

4. What is the present value of a perpetual stream of annual cash flows, with the first cash flow of $100 to be received in one year, and with all subsequent cash flows growing at a rate of 3%, assuming a discount rate of 8%?

Additional Problems:

A1. If you deposit $12,000 in a bank account that pays 10% interest annually, how much will be in your account after 7 years?

A2. What is the present value of a security that will pay $10,000 in 20 years at an interest rate of 8%?

A3. Find the future value of the following ordinary annuities:

a. $600 per year for 10 years at 10%

b. $300 per year for 5 years at 5%

c. $600 per year for 5 years at 0%

A4. Find the present value of the following ordinary annuities:

a. $600 per year for 10 years at 10%

b. $300 per year for 5 years at 5%

c. $600 per year for 5 years at 0%