Homework 2

# Homework 2 - Emilie Gein Homework 2 1 Compute present value...

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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 cash-flow stream if the interest rate is 6 percent?

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## This note was uploaded on 03/30/2008 for the course FINA 3001 taught by Professor Someguy during the Spring '08 term at Minnesota.

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Homework 2 - Emilie Gein Homework 2 1 Compute present value...

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