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Unformatted text preview: is 10%. What is the present value of this cash flow stream (PV @t=0)? 4. You need to borrow $23,000 to buy a truck. The current loan rate is 7.99% compounded monthly and you want to pay the loan off in equal monthly payments over 50 months. What is the size of your monthly payment? 5. What is the future value in 12 years of $800 payments received at the beginning of each year for the next 12 years? Assume an interest rate of 7%. 6. You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning 5 year from now. What is the present value of your winnings at a 10% discount rate? 7. You borrowed $1,200 at 8% compounded semiannually . Your payments are $120 at the end of each year . How many years will you make payments on the loan? ( Hint: compounding frequency is different from payment frequency; compounding effect? Effective interest rate? )...
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This note was uploaded on 12/13/2011 for the course FINC 322 taught by Professor Nazar during the Fall '11 term at Ferris State.
 Fall '11
 Nazar
 Time Value Of Money

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