Question

The value of the following cash flows four years from today is
$7,201.27. The interest rate is 4.3 percent. What is the value of
the Year 3 cash flow?

Year | Cash Flow | |||

1 | $ | 1,465 | ||

2 | $ | 1,592 | ||

3 | $ | ? | ||

4 | $ | 2,565 | ||

Multiple Choice

A. $1,094.80

B. $1,190.98

C. $1,295.60

D. $1,242.19

E. $1,190.98

Answer #1

**The value of the year 3 cash flow is computed as shown
below:**

**Value of cash flows four years from today = Year 1 cash
flow x (1 + interest rate) ^{3} + Year 2 cash flow x (1 +
interest rate)^{2} + Year 3 cash flow x (1 + interest
rate)^{1} + Year 4 cash flow**

$ 7,201.27 = $ 1,465 x 1.043^{3} + $ 1,592 x
1.043^{2} + Year 3 cash flow x 1.043^{1} + $
2,565

$ 7,201.27 = $ 1,662.227833 + $ 1,731.855608 + Year 3 cash flow
x 1.043^{1} + $ 2,565

$ 7,201.27 - $ 1,662.227833 - $ 1,731.855608 - $ 2,565 = Year 3
cash flow x 1.043^{1}

$ 1,242.186559 / 1.043 = Year 3 cash flow

**Year 3 cash flow = $ 1,190.98 Approximately**

Feel free to ask in case of any query relating to this question

Assuming an interest rate of 6.3 percent, what is the value of
the following cash flows four years from today?
Year
Cash Flow
1
$
3,225
2
4,220
3
6,110
4
8,245

(a) What is the future value of the following unequal cash flows
using 9% interest rate?
YEAR
1
2
3
4
5
CASH FLOW
$600
$800
$500
$400
$900
(b) What would be an annuity payment (PMT) that would give the
same future value
using the same interest rate and same
number of years?
(c) What is the present value of the following unequal cash
flows using
7.5% interest rate?
YEAR
1
2
3
4
CASH FLOW
$950 ...

The appropriate
discount rate for the following cash flows is 12 percent compounded
quarterly.
Year
Cash
Flow
1
$800
2
700
3
0
4
1,400
Required:
What is the
present value of the cash flows?
Multiple Choice
$2,178.57
$2,093.13
$2,135.85
$2,162.05
$383.67

1. The appropriate discount rate
for the following cash flows is 6 percent compounded
quarterly.
Year
Cash
Flow
1
$900
2
600
3
0
4
1,100
Required:
What is the present value of the
cash flows?
A. $2,202.3
B. $2,254.36
C. $2,247.24
D. $1,129.24
E. $2,292.19
2. What is the future value of $500 in 23 years assuming an
interest rate of 9 percent compounded semiannually?
A. $665.56
B. $3,787.21
C. $3,628.94
D. $3,597.85
E. $594.59...

1.
What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
−$ 8,000
1
2,800
2
1,000
3
2,900
4
2,100
Multiple Choice
3.57 years
3.80 years
3.64 years
3.92 years
3.62 years
2.
An investment project provides cash inflows of $650 per year
for 8 years.
a. What is the project payback period if the
initial cost is $3,250?
b. What is the project payback period if...

What is the net present value of a project with the following
cash flows if the discount rate is 10 percent?
Year
0
1
2
3
4
Cash Flow -$32,000
$9,000 $10,000
$15,200 $7,800
A. $1,085.25
B. $1,193.77
C. $3,498.28
D. $4,102.86
E. $4,513.15

QUESTION 1:
Which of the following will decrease the present value of the
mixed cash flows for years 1 through 5 of $1,000; $4,000; $9,000;
$5,000; and $2,000 respectively given a 10% discount rate? (Choose
all that apply - this is an all or nothing problem; if you choose
an option that is wrong or do not choose an option that is correct,
your entire answer will be marked wrong).
Decrease the discount rate by 2%.
Switch cash flows for...

Assume that you have the following possible cash flows:
Years 1 and 2 CFs = $300;
Year 3 CF = $100;
Years 4 and 5 CFs = $200.
What is the value of the cash flows at today if the
required discount rate is 5%?
A.
556.45
B.
695.45
C.
569.45
D.
956.45
E.
965.45

Calculate the future value of $100,000 ten years from now based
on the following annual interest rates:
2%
5%
8%
10%
Calculate the present value of a stream of cash flows based on a
discount rate of 8%. Annual cash flow is as follows:
Year 1 = $100,000
Year 2 = $150,000
Year 3 = $200,000
Year 4 = $200,000
Year 5 = $150,000
Years 6-10 = $100,000
Calculate the present value of the cash flow stream in problem 2...

Calculate the net future value at year 2 for the following cash
flows and interest rates compounded quarterly (rounded $ to two
places after the decimal). The year 0 cash flow is $373, the year 1
cash flow is $200, and the year 2 cash flow is $-147. The interest
rate for the first period (year 0 to 1) is 3% and the interest rate
for the second period (year 1 to 2) is 4.5%.

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