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HW _2 Fall2010

# HW _2 Fall2010 - F 370 Homework#2 C loses Sunday Sept 12th...

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F370 Homework #2 Opens: Sept 9 th at 3pm Closes: Sunday Sept 12 th at 11:55pm 1 . A perpetuity has an annual payment level of \$43 and a discount rate of 12%. A separate perpetuity is the same, except that it’s cash flows grow at a rate of 4% per year. To the nearest dollar, what is difference between the present values of the two perpetuities? A. \$167.43 B. \$179.17 C. \$200.39 D. \$164.64 7.9% 2. The second flow is smudged in the following uneven stream whose discount rate is 9%. If the full stream has a present value of \$1,773.42, then to the nearest dollar, what is the number that was smudged out? Do not use a trial-and-error approach.

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3. If you used your calculator’s programmed TVM keys in problem #2, then, what two different time-value-of-money perspectives did you use for the two TVM steps needed to get your final answer?
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