What is the present value to be received in four years

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Assume that you are nearing graduation and have applied for a job with a local bank. As part of the bank's evaluation process, you have been asked to take an examination that covers several financial analysis techniques. The first section of the test addresses time value of money analysis. See how you would do by answering the following questions.

Problem 1: Draw time lines for (a) a $2000 lump sum cash flow at the end of year 4, (b) an ordinary annuity of $1000 per year for 5 years, and (c) an uneven cash flow stream of -$450, $1000, $650, $850 and $500 at the end of years 0 through 4.

Problem 2: What is the future value of an initial $1000 after 5 years if it is invested in an account paying 5% annual interest?

Problem 3: What is the present value of $1000 to be received in 4 years if the appropriate interest rate is 5%?

Reference no: EM132998130

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