a) if the interest rate is 8%, what is the present value of the cash flows? b) what is the future value in 3 years of the present value you compute in a? c) suppose you deposit the cash flows in a bank account that pays 8% interest in a year.  What is the balance in the account at the end of each of the nest 3 years (after your deposit is made)?  How does the final bank balance compare with your answer in b?

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A: Calculate the present value as follows: Present value = Future value / (1+rate)^years.

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A:

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Q: 26 27 28 29 30 5% I 7% I5% 7% 5% I 7% 5% I %7 2000 1000 2000 1000 1000 2000 1000 2000 1000 2.

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