Allen

9.4 Find the following values assuming a regular, or ordinary, annuity:

a The present value of $400 per year for ten years at 10 percent

Don't use plagiarized sources. Get Your Custom Essay on
Allen
Just from $5/Page
Order Essay

= $400 x 6.145

= $2,458.00

b The future value of $400 per year for ten years at 10 percent

= $400 x 15.937

= $6,374.80

c The present value of $200 per year for five years at 5 percent

= $200 x 4.329

= $865.80

d The future value of $200 per year for five years at 5

= $200 x 5.526

= $1,105.20

9.6 Consider the following uneven cash flow stream:

Year Cash Flow PV Factor Present Value

0 $0

1 250 0.909 227.25

2 400 0.826 330.40

3 500 0.751 375.50

4 600 0.683 409.80

5 600 0.621 372.60

Total 1,715.55

=======

a What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent?

$1,715.55

9.7 Consider another uneven cash flow stream:

9.7

Year Ca Year Cash Flow PV Factor Present Value

0 $2,000 1.000 2,000.00

1 2,000 0.909 1,818.00

2 0 0.826 0.00

3 1,500 0.751 1,126.50

4 2,500 0.683 1,707.50

5 4,000 0.621 2,484.00

Total 9,136.00

=======

a. What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 10 percent?

$9,136.00

b What is the value of the cash flow stream at the end of Year 5 if the cash flows are invested in an account that pays 10 percent annually

Year Cash Flow FV Factor Future Value

0 $2,000 1.611 3,222.00

1 2,000 1.464 2,928.00

2 0 1.331 0.00

3 1,500 1.210 1,815.00

4 2,500 1.100 2,750.00

5 4,000 1.000 4,000.00

Total 14,715.00

=======

9.9 Assume that you just won $35 million in the Florida lottery, and hence the state will pay you 20 annual payments of $1.75 million each beginning immediately. If the rate of return on securities of similar risk to the lottery earnings (e.g., the rate on 20-year U.S. Treasury bonds) is 6 percent, what is the present value of your winnings?

Present Value of Annuity of Annuity of $1,750,000 for 20 years

Immediate Payment $ 1,750,000

Annuity for 19 years at 6% (1,750,000 x 11.158) $19,526,500

Total $21,276,500

=========

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Confirm Eligibility