EXERCISE 2: FUTURE VALUES AND PRESENT VALUES With an 8% interest rate, calculate the (1) net future value and (2) net present value with the following five-year cash flow projections. Cash flows $150,000 40,000 50,000 55,000 60,000 70,000 Eactors @ 8% Euture values 4103nts

EXERCISE 2: FUTURE VALUES AND PRESENT VALUES With an 8% interest rate, calculate the (1) net future value and (2) net present value with the following five-year cash flow projections. Cash flows $150,000 40,000 50,000 55,000 60,000 70,000 Eactors @ 8% Euture values 4103nts

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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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

EXERCISE 2: FUTURE VALUES AND PRESENT VALUES
With an 8% interest rate, calculate the (1) net future value and (2) net present value with
the following five-year cash flow projections.
Cash flows
$150,000
40,000
50,000
55,000
60,000
70,000
Factors @ 8% Euture values
1
3.
5n

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