Solve for the missing information pertainıng lo Using the tables in Exhibits 26–3 and 26-4, determine the present value of the following cash flows, discounted at an annual rate of 15 percent. а. $40,000 to be received 20 years from today. b. $24,000 to be received annually for 10 years. $16,000 to be received annually for five years, with an additional $20,000 salvage value expected at the end of the fifth year. d. $30,000 to be received annually for the first three years, followed by $20,000 received annu- ally for the next two years (total of five years in which cash is received). с.
Solve for the missing information pertainıng lo Using the tables in Exhibits 26–3 and 26-4, determine the present value of the following cash flows, discounted at an annual rate of 15 percent. а. $40,000 to be received 20 years from today. b. $24,000 to be received annually for 10 years. $16,000 to be received annually for five years, with an additional $20,000 salvage value expected at the end of the fifth year. d. $30,000 to be received annually for the first three years, followed by $20,000 received annu- ally for the next two years (total of five years in which cash is received). с.
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
Related questions
Question
26.4
Transcribed Image Text:kept short. They include only selected discount rates and only extend for
Present Value of $1 Due in n Periods*
EXHIBIT 26-3
Number of
Present Value of $1 Payable
in n Periods
Discount Rate
Periods
(n)
1%
12%
5%
6%
8%
10%
12%
15%
20%
1
.990
.985
.952
.943
.926
.909
.893
.870
.833
.980
.971
.907
.890
.857
.826
.797
.756
.694
.971
.956
.864
.840
.794
.751
.712
.658
.579
.961
.942
.823
.792
.735
.683
.636
.572
.482
.951
.928
.784
.747
.681
.621
.567
.497
.402
.942
.915
.746
.705
.630
.564
.507
.432
.335
.933
.901
.711
.665
.583
.513
.452
.376
.279
.923
.888
.677
.627
.540
.467
404
.327
.233
.914
.875
.645
.592
.500
424
.361
.284
.194
10
.905
.862
.614
.558
.463
.386
.322
.247
.162
20
.820
.742
.377
.312
.215
.149
.104
.061
.026
24
.788
.700
.310
.247
.158
.102
.066
.035
.013
36
.699
585
.173
.123
.063
032
.017
.007
.001
*The present value of $1 is computed by the formula p = 1/(1 + i)n, where p is the present value of $1, i is the discount rate, and n is the number of
periods until the future cash flow will occur. Amounts in this table have been rounded to three decimal places and are shown for a limited number of
periods and discount rates. Many calculators are programmed to use this formula and can compute present values when the future amount is entered
along with values for i and n.
EXHIBIT 26-4
Present Value of $1 to Be Received Periodically for n Periods
Present Value of a $1 Annuity
Discount Rate
Number of
Receivable Each Period for n
Periods
5%
6%
8%
10%
12%
15%
20%
Periods
1%
12%
(n)
0.990
0.985
0.952
0.943
0.926 0.909 0.893 0.870
0.833
1.956
1.859
1.833
1.783
1.736 1.690 1.626
1.528
1.970
2.912
2.723
2.673
2.577
2.487 2.402 2.283
2.106
2.941
3.546
3.465
3.312 3.170 3.037 2.855
2.589
3.902
3.854
4.329
4.212
3.993
3.791 3.605 3.352
2.991
4.853
4.783
5.076
4.917
4.623
4.355 4.111 3.784
3.326
5.795
5.697
5.206
4.868 4.564 4.160
3.605
6.598
5.786 5.582
6.728
6.210
5.747
5.335 4.968 4.487
3.837
7.486
6.463
7.652
4.031
7.108
6.802 6.247 5.759 5.328 4.772
8.566
8.361
4.192
7.722
7.360 6.710 6.145 5.650 5.019
9.471
9.222
4.870
10
11.470 9.818 8.514 7.469 6.259
17.169 12.462
4.937
20
18.046
12.550 10.529 8.985 7.784 6.434
21.243
20.030 13.799
24
14.621 11.717 9.677 8.192 6.623 4.993
30.108
27.661 16.547
36
2 3 4 5 6 7 8 9 으
1 2 3 4 5 6 7 8 9으 T
Transcribed Image Text:Solve for the missing information pertaining to each investment proposal.
Using the tables in Exhibits 26–3 and 26–4, determine the present value of the following cash
flows, discounted at an annual rate of 15 percent.
$40,000 to be received 20 years from today.
b. $24,000 to be received annually for 10 years.
а.
$16,000 to be received annually for five years, with an additional $20,000 salvage value
expected at the end of the fifth year.
с.
d. $30,000 to be received annually for the first three years, followed by $20,000 received annu-
ally for the next two years (total of five years in which cash is received).
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