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Part C: EXCEL Questions. Develop your answers for each question on a separate tab and submit...

Part C: EXCEL Questions. Develop your answers for each question on a separate tab and submit a single EXCEL file. Put your final answer for each question in the Answer Document and submit.

1. A firm expects to receive a continuous cash flow over the next 4 years at a rate of ??(?) = 1000 × 0.5 ? . Develop an EXCEL spreadsheet to calculate the present value of this cash flow assuming an effective rate of interest of 5% per annum. Solve this problem analytically and compare your answers.

Homework Answers

Answer #1

The present value of cash flows is $4324.38. If we look carefully the present value of cash flows year after year is increasing at a decreasing rate even the cash flows are increasing at a constant rate of $500.

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