Question

MT 5) If someone will pay you 100 dollars in 19 years and interest rate is...

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.  

Homework Answers

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%
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