Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value these cash flows? The present value of these cash flows is $. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $. (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? The balance in the account at the end of year one is $. (Round to the nearest cent.) The balance in the account at the end of year two is $. (Round to the nearest cent.) The balance in the account at the end of year three is $. (Round to the nearest cent.) How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.) The final bank balance in (c) is v the bank balance from part (b).
Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value these cash flows? The present value of these cash flows is $. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $. (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? The balance in the account at the end of year one is $. (Round to the nearest cent.) The balance in the account at the end of year two is $. (Round to the nearest cent.) The balance in the account at the end of year three is $. (Round to the nearest cent.) How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.) The final bank balance in (c) is v the bank balance from part (b).
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
Transcribed Image Text:Suppose you receive $100 at the end of each year for the next three years.
a. If the interest rate is 8%, what is the present value of these cash flows?
b. What is the future value in three years of the present value you computed in (a)?
c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with
your answer in (b)?
a. If the interest rate is 8%, what is the present value of these cash flows?
The present value of these cash flows is $ |. (Round to the nearest cent.)
b. What is the future value in three years of the present value you computed in (a)?
The future value in three years is $
(Round to the nearest cent.)
c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)?
The balance in the account at the end of year one is $
(Round to the nearest cent.)
The balance in the account at the end of year two is $
(Round to the nearest cent.)
The balance in the account at the end of year three is $
(Round to the nearest cent.)
How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.)
The final bank balance in (c) is
the bank balance from part (b).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education