Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Textbook Question
Chapter 4, Problem 11P
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)?
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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)?…
Suppose you receive $100 at the end of each year for the next 3 years. 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?
K
Suppose you receive $500 at the end of each year for the next three years.
a. If the interest rate is 7%, 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 7% 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. The present value of the cash flow is $
(Round to the nearest cent)
Chapter 4 Solutions
Corporate Finance
Ch. 4.1 - Prob. 1CCCh. 4.1 - Prob. 2CCCh. 4.2 - Prob. 1CCCh. 4.2 - Prob. 2CCCh. 4.2 - Prob. 3CCCh. 4.3 - Prob. 1CCCh. 4.3 - Prob. 2CCCh. 4.4 - Prob. 1CCCh. 4.4 - What benefit does a firm receive when it accepts a...Ch. 4.5 - How do you calculate the present value of a a....
Ch. 4.5 - How are the formulas for the present value of a...Ch. 4.6 - Prob. 1CCCh. 4.6 - Prob. 2CCCh. 4.7 - Prob. 1CCCh. 4.7 - Prob. 2CCCh. 4.8 - Prob. 1CCCh. 4.8 - Prob. 2CCCh. 4.9 - Prob. 1CCCh. 4.9 - Prob. 2CCCh. 4.A - Your grandmother bought an annuity from Rock Solid...Ch. 4.A - Prob. A.2PCh. 4 - You have just taken out a five-year loan from a...Ch. 4 - Prob. 2PCh. 4 - Calculate the future value of 2000 in a. Five...Ch. 4 - Prob. 4PCh. 4 - Your brother has offered to give you either 5000...Ch. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Your daughters currently eight years old. You...Ch. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Suppose you receive 100 at the end of each year...Ch. 4 - You have just received a windfall from an...Ch. 4 - Prob. 13PCh. 4 - You have been offered a unique investment...Ch. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - How would your answer to Problem 16 change if the...Ch. 4 - The British government has a consol bond...Ch. 4 - What is the present value of 1000 paid at the end...Ch. 4 - You are head of the Schwartz Family Endowment for...Ch. 4 - When you purchased your house, you took out a...Ch. 4 - Prob. 22PCh. 4 - Your grandmother has been putting 1000 into a...Ch. 4 - A rich relative has bequeathed you a growing...Ch. 4 - Prob. 25PCh. 4 - You work for a pharmaceutical company that has...Ch. 4 - Your oldest daughter is about to start...Ch. 4 - A rich aunt has promised you 5000 one year from...Ch. 4 - You are running a hot Internet company. Analysts...Ch. 4 - Prob. 31PCh. 4 - Prob. 32PCh. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Prob. 42PCh. 4 - Prob. 43PCh. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51P
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- Attach a complete solution. Draw the cash flow diagram.Suppose that P 4500 is deposited each year into a bank account that pays 8% interest compounded quarterly. How much would be accumulated in his fund by the end of the 4th year? The first payment occurs at time zero (now).arrow_forwardAssume that you deposit RM700 in a savings account that pays 5% per year over 6 years. Your savings benefits from _____ as you leave the interest earnings in your account, and your interest earnings increases every year. Select one: a. compounding b. accumulating c. discounting d. aggregatingarrow_forwardFind the equivalent present worth of the cash receipts in the accompanying diagram, where i = 8% compounded annually. In other words, how much do you have to deposit now (with the second deposit in the amount of $1,000 at the end of the first year) so that you will be able to withdraw $600 at the end of the second year through the fourth year, and $800 at the end of the fifth year, where the bank pays you 8% annual interest on your balance?arrow_forward
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