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CHAPTER6HANDOUT

# CHAPTER6HANDOUT - is the present value of these cash flows...

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Chapter 6 Problems: 1) You have \$200 in the bank today. If the interest rate is 5% p.a. (per annum), how much money will be in your bank account in two years? 2) You wish to have \$3,000 in your bank four years from today. If the interest rate is 6% p.a., how much money do you need in your bank account today? 3) You go to the bank and the bank quotes you an interest rate of 8% p.a. If the rate of inflation is 5%, what is the real rate of interest? 4) You know you will receive \$500 one year from today and \$1,000 two years from today which you will put into a bank account. If the interest rate is 4% p.a., what

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Unformatted text preview: is the present value of these cash flows? How much money will be in the bank account 25 years from today? 5) You will receive \$150 today and \$250 two years from today which you will put into a bank account with an interest rate of 6% p.a. What is the present value of these cash flows today? How much will be in your bank account 10 years from today? 6) You are promised a payment of \$250 every year starting next year for three years (last payment at t=3). If the interest rate is 3% p.a., what is the present value of these cash flows? What is the future value of these cash flows at t=3?...
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