1. Consider the following cash flow payments An income of $2000 at the end of year 2, an income of $5000 at the end of year 4, an expense of $3000 at the end of year 8, and a final income of $4000 at the end of year 10. • Draw the cash flow diagram for the cash flow payments. • Write an expression: what is the present equivalent value of these payments over the 10-year period assuming an interest rate of 10% per year. Just write down the expression like "e.g. P = 1,000 (P/F, 4%, 10) + 2,500 (P/A, 4%, 5) -4,000". You don't need to calculate the final numerical answer. (Hint: you can write out the present equivalent value for each cash flow, and then sum them up.)

1. Consider the following cash flow payments An income of $2000 at the end of year 2, an income of $5000 at the end of year 4, an expense of $3000 at the end of year 8, and a final income of $4000 at the end of year 10. • Draw the cash flow diagram for the cash flow payments. • Write an expression: what is the present equivalent value of these payments over the 10-year period assuming an interest rate of 10% per year. Just write down the expression like "e.g. P = 1,000 (P/F, 4%, 10) + 2,500 (P/A, 4%, 5) -4,000". You don't need to calculate the final numerical answer. (Hint: you can write out the present equivalent value for each cash flow, and then sum them up.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Solve, a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (iii) as the reference points in time. What can you conclude about “reference year shift” and “proportionality” issues of the IRR method? b. Calculate the PW at MARR=10 % per year at EOY zero for (i) and (ii) and EOY four for (ii) and (iii). How do the IRR and PW methods compare?
Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
At a rate of 8%, what is the present value of the following cash flow stream? $0 at Time 0; $100 at the end of Year 1; $300 at the end of Year 2; $0 at the end of Year 3; and $500 at the end of Year 4? use excel.
Consider end-of-year cash flows for $8000, $15000, $2200O, $29000, and $36000 for years 1 to 5. If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform [ Select ] annuity amount A? If the series of cash flows is to be split into a uniform series and a [ Select ] uniform gradient, what is the uniform gradient amount G? What is the uniform annual [ Select ] equivalent if the interest rate is 12% per year? What is the future equivalent if the [ Select ] interest rate is 12% per year? What is the present equivalent if the [ Select ] interest rate is 12% per year?
Find the internal rate of return (IRR) for the following cash flows. Enter your answer as a percent and include at least two decimal points, e.g., 8.35 for 8.35 %, not 0.08. Year Cash Flow 0 750 1 200 2 375 3 250 4 100 5 75
Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. [ Select ) If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform annuity amount A? ( Select ) If the series of cash flows is to be split into a uniform series and a uniform gradient, what is the uniform gradient amount G? What is the uniform annual equivalent if the interest rate is 12% per year? [ Select ) ( Select ] What is the future equivalent if the interest rate is 12% per ycar? [ Select] What is the present equivalent if the interest rate is 12% per year?
Consider a loan of $10,000 and the following pattern of cash flows. a. What is the interest rate that makes the present worth equal to $0.00? b. Using the interest rate determined in part (a), and leaving the −$10,000 at year 0 in place, determine the equal annual incomes that are equivalent to the gradient series in years 1, 2, 3, and 4?
Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If the series of cash flows is to be split into a uniform [ Select ] series and a uniform gradient, what is the uniform annuity amount A? If the series of cash flows is to be split into a uniform [ Select ] series and a uniform gradient, what is the uniform gradient amount G? What is the uniform annual equivalent if the interest [ Select ] rate is 12% per year? What is the future equivalent if the interest rate is 12% [ Select ] per year? What is the present equivalent if the interest rate is 12% per year? [ Select ] > >
Consider the following cash flow profile: Suppose the positive-valued cash flows are now replaced by a geometric series. If the cash flow at end of year 1 is $10,000, what geometric rate is required for the cash flow profiles to be equivalent? Interest is at a compounded annual rate of 6%.
What is the NPV of the following cash flows if the required rate of return is 0.13? Year 0 1 2 3 4 CF -3,241 2,952 1,242 3,310 1,616 Enter the answer with 2 decimals (e.g. 1000.23).
Assuming equal ume Intervals between the payments and a constant rate of return, which of the following cash flow patterns represents an annulty? Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 A) $1,000 $1,000 $1,000 $ 1,000 $1,000 $ 1,000 B) $ c) $ 500 $ 500 $ 500 $ 500 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600 Multiple Choice A B Any of the answers can represent an annuity.
For the cash flows shown, determine: (a) the number of possible i* values (b) the i* value displayed by the IRR function (c) the external rate of return using the MIRR method if ii = 18% per year and ib = 10% per year. Year 0 1 2 3 4 Revenues, $ 0 25,000 19,000 4000 18,000 Costs, $ −6000 −30,000 −7000 −6000 −12,000

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