Question

MT

5) If someone will pay you 100 dollars in 19 years and interest rate is estimated to be 7.2% over those years, what is the estimated value of that cash flow? Provide answer to the nearest cent, xxx.xx, and enter without a dollar sign.

6)A firm's stock has 50% chance of a 8% rate of return and a  50% chance of a 27% rate of return. What is the standard deviation of return for this stock? Answer as a percent return  to the nearest hundredth of a percent as in xx.xx without entering a percent symbol.  

Answer 1

5)	Present Value	=-pv(rate,nper,pmt,fv)
		= $ 26.69
	Where,
	rate	=	7.20%
	nper	=	19
	pmt	=	0
	fv	=	$ 100.00
6)	Standard deviation	9.50%
Working:
	Expected return	=	(50%*8%)+(50%*27%)
		=	17.50%
	Variance	=	(((8%-17.50%)^2)*50%)+(((27%-17.50%)^2)*50%)
		=	0.009025
	Standard deviation	=	0.009025	^(1/2)
		=	9.50%