Consider a series of cash flows that starts with $1,000 at the end of time 1 and decreases by $20 each period. The last cash flow in the series occurs at time 15. If the interest rate is 8% per period, what is the present equivalent (time = 0) of the series of cash flows?

Use the table below: PV of a cash flow = cash flow at time n /(1+ rate)^n Cost 8.00000%…

Answered: Consider a series of cash flows that…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following cash flow diagram. What is the value of X if the present worth of the diagram is $400 and the interest rate is 15% compounded annually? a. $246 b. $165 c. $200 d. $146.
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Consider an EOY geometric gradient, which lasts for eight years, whose initialvalue at EOY one is $250,000 and f = 6% per year thereafter. Find the equivalentuniform gradient amount over the same period if the initial value of the cash flowsat the end of year one is $200,000. Answer the following questions to determinethe value of the gradient amount, G. The interest rate is 8% per year.
1. Draw a cash flow diagram showing payments of S6000 now, $2500 two years from now and $4500 six years from now. Interest rate is 9% per year. For the given cash flows find the: a) Total present worth equivalent. b) Total future worth equivalent. and c) Equivalent annual worth (uniform series) from year 1 to 6.
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