Emilie Gein
Homework 2
1.Compute present value of a $100 cash flow for the following combinations of discount rates and
times:
a.
r=8%, t=10years
100/(1.08)10
46.319
b.
r=8%, t=20 years
100/(1.08)20
21.455
c.
r=4%, t=10years
100/(1.04)10
67.556
d.
r=4%, t=20 years
100/(1.04)20
45.639
1.Compute the future value of a $100 cash flow for the same combinations of rates and times
problem 1.
a.
100(1.08)
10
= 215.89
b.
100(1.08)
20
=466.09
c.
100(1.04)
10
=148.02
d.
100(1.04)
20
=219.11
1.FV=100(1+.04
)113
=8409.44512
FV=100(1+.08)113=598252.2905
1.Simple Interest FV=1000+(1000x.04)x10=1400
Compound Interest FV=1000(1+.04)10=1480.24428. Interest on interest earned is $80.24428.
1.Find the interest rate implied by the following combinations of present and future values
a.
(684/400)
(1/11)
1= 4.998%
b.
(249/183)
(1/4)
1=8.003%
c.
(300/300)
(1/7)
1= 0%
1.What is the present value of the following cashflow stream if the interest rate is 6 percent?
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 Spring '08
 someguy
 Time Value Of Money

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