1. Different Cash Flow. Given the following cash inflow at the end of each year, what is the future value of this cash flow at 6%, 9%, and 15% interest rates at the end of the seventh year? Year 1: $15,000 Year 2: $20,000 Year 3: $30,000 Years 4 through 6: $0 Year 7: $150,000 6. Different Cash Flow. Given the following cash inflow, what is the present value of this cash flow at 5%, 10%, and 25% discount rates? Year 1: $3,000 Year 2: $5,000 Years 3 through 7: $0 Year 8: $25,000 10. Present Value. A smooth used-car salesman who smiles a lot is offering you a great deal on a “preowned” car. He says, “For only six annual payments of $2,500 this beautiful 1998 Honda Civic can be yours.” If you can borrow money at 8%, what is the price of this car? 11. Payments. Cooley Landscaping Company needs to borrow $30,000 for a new front-end dirt loader. The bank is willing to loan the funds at 8.5% interest with annual payments at the end of the year for the next ten years. What is the annual payment on this loan for Cooley
This is the end of the preview. Sign up
access the rest of the document.
This note was uploaded on 10/11/2011 for the course BUSINESS 2415 taught by Professor Dr.burke during the Fall '11 term at AIB College of Business.