discounted

assignment_1_2nd_mester_answer

ethefuturevalueof$1,女人性欲强的表现 000compoundedannuallyfor

a.10yearsat5percent.

20yearsat5percent.

heinterestearnedinpartcnottwicetheamo教室英语 untearnedinparta?

Answer:Value=C0(1+r)T=$1,000(1.05)10=$1,628.89

Value=$1,000(1.07)10=$1,Value=$1,000(1.05)20=$2,653.30

einterestcompoundsoninterestalreadyearned,theinterestearnedinpart(c),

$1,653.30(=$2,653.30-$1,000)ismorethandoubletheamountearnedinpart(a),

$628.89(=$1,628.89).

atetheprentvalueofthefollowingcashflowsdiscountedat10percent.

a.$1,000receivedvenyearsfromtoday.

b.$$500receivedeightyearsfromtoday.

Answer:Theprentvalue,PV,ofeachcashflowissimplythe

amountofthatcashflowdiscountedbackfromthedateof

mpleinpart(a),discountthecashflowinyear7byvenperiods,(1.10)7.

(C7)=C7/(1+r)7=$1,000/(1.10)7=$513.16

(C1)=$2,000/1.10=$1,818.18

(C8)=$500/(1.10)8=$233.25

etheopportunitytomakeaninvestmentthatcosts

$900,akethisinvestmentnow,youwillreceive

$120,000oneyearfromtoday,$250,000and$800,000twoand

threeyearsfromtoday,ropr蒜苔炒肉怎么炒好吃 iatediscountrateforthisinvestmentis12percent.

youmaketheinvestment?

thenetprentvalue(NPV)ofthisopportunity?

iscountrateis11percent,shouldyouinvest?ComputetheNPVtosupportyouranswer.

Answer:uld

maketheinvestmentonlyiftheprentvalueofthecashinflowsisgreaterthanthecost

heinvestmentoccurstoday(year0),itdoesnotneedtobe

discounted.

PV(Investment)=$900,000

PV(CashInflows)=$120,000/(1.12)+$250,000/(1.12)2+$800,000/(1.12)3

=$875,865.52

SincethePVofthecashinflows,$875,865.52,islessthanthecostoftheinvestment,

$900,000,youshouldnotmaketheinvestment.

prentvalue,NPV,istheprentvalueofthecashinflowsminusthecostofthe

investment.

NPV=PV(CashInflows)–CostofInvestment

=$875,865.52–$900,000=-$24,134.48

TheNPVis-$24,134.48.

atethePVofthecashinflows,discountedat11percent,minusthecostofthe

PVispositive,PVisnegative,you

shouldnotinvest.

NPV=PV(CashInflows)–CostofInvestment

=$120,000/(1.11)+$250,000/(1.11)2+$800,000/(1.11)3

–$900,000

=-$4,033.18

SincetheNPVisstillnegative,-$4,033.18,youshouldnot

thefuturevaluethreeyears

henceof$1,000investedinanaccountwithastatedannualinterestrateof8percent,

ndedannually?

ndedmiannually?ndedmonthly?

Answer:Tofindthe密码英文 futurevalueoftheinvestment,convert

thestatedannualinterestrateofeightpercenttotheeffective

annualyield,istheappropriatediscountratebecauitcapturestheeffectofcompoundingperiods.

nualcompounding,theEAYiqualtothestatedannualinterestrate.

FV=C0(1+EAY)T

=$1,000(1.08)3=$1,259.71

Thefuturevalueis$1,259.71.

atetheeffectiveannualyield(EAY),wher自强是什么意思 emdenotesthenumberofcompounding

periodsperyear.

EAY=[1+(r/m)]m–1

=[1+(0.08/2)]2–1=0.0816

Applythefuturevalueformula,usingtheEAYfortheinterestrate.

FV=C0[1+EAY]3

=$1,000(1+0.0816)3=$1,265.32

Thefuturevalueis$1,265.32.

atetheeffectiveannualyield(EAY),wheremdenotesthenumberofcompounding

periodsperyear.

EAY=[1+(r/m)]m–1

=[1+(0.08/12)]12–1=0.083

Applythefuturevalueformula,usingtheEAYfortheinterestrate.

FV=C0(1+EAY)3

=$1,0毛岁 00(1+0.083)3=$1,270.24

Thefuturevalueis$1,270.24.

ninterestrateof10percentperyear,whatisthe

valueatdatet=,theendofyear5)ofaperpetualstream

of$120annualpaymentsstartingatdatet=9?Answer:Applying

theperpetuityformulatoastreamofcashflowsthatstartsatthe

endofyear9willgeneratetheprentvalueofthatperpetuityasoftheendofyear8.

PV8=[C9/r]

=[$120/0.1]=$1,200

TofindthePVofthecashflowsasoftheendofyear5,

discountthePVoftheperpetuityasoftheendofyear8backthreeyears.

PV5=PV8/(1+r)3

=$1,200/(1.1)3=$901.58

ThePVasoftheendofyear5is$901.58.

youbuyanastthatwillgenerateincomeof

$1,200peryearforeightyears?Thepriceoftheastis$6,200andtheannualinterestrateis10percent.

Answer:hecash

inflowsformanannuity,youcanutheprentvalueofan

uityfactorisreferredtoasATr,whereTisthenumberofpaymentsandristheinterestrate.

PV(Investment)=-$6,200

PV(CashInflows)=CATr

=$1,200A80.1=$6,401.91

TheNPVoftheastisthesumoftheinitialinvestment(-$6,200)andthePVofthecashinflows($6,401.91).

NPV=-InitialInvestment+CashFlows

=-$6,200+$6,401.91=$201.91

SincetheasthasapositiveNPV,$201.91,youshouldbuyit.