9.4) find the following values assuming a regular, or ordinary, annuity: a) The

Question

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 b) The future value of $400 per year for ten year at 10 percent c) The present value of $200 per year for five years at 5 percent d) The future value of $200 per year for five years at 5 percent 9.6) consider the following uneven cash flow stream: Year Cash Flow 0 $0 1 $250 2 $400 3 $500 4 $600 5 $600 A) What is the present (year0) value if the opportunity cost (discount) rate is 10 percent? B) Add an outflow (or cost) of $1000 at year 0. What is the present value (or net present value) of the stream?

Explanation / Answer

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

400*{ 2.5937 - 1}/10% = 400*1.5937/10% = $6,374.80

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