Please do not answer using excel 3) What is the future value at the end of year
ID: 2809051 • Letter: P
Question
Please do not answer using excel
3) What is the future value at the end of year 10 of a series of 6 deposits? The first deposit occurs at the end of year 5 and is $700. The remaining deposits increase by $150/year (so the last deposit will be $1,450 and will occur at the end of year 10). Assume i = 10% annual rate compounded annually.
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4) Your business is expected to generate a $60,000 profit at the end of year 1, and profit will increase by 9% per year through year 10. If you can earn 7% annual interest compounded annually, what is the present value of all your profits over the next 10 years?
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5) What is the future value at the end of year 13 of an investment that starts at $6,000 and grows by 7% per year for 13 years ($6,000 is invested at the end of year 1). The interest rate is 10% annual compounded annually.
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6) You anticipate a cash flow of $900 at the end of year 1, $600 at the end of year 2, and $500 at the end of year 4. What is the annual equivalent of the cash flow for years 1 through 4? In other words, what constant value “A” could you receive at the end of years 1-4 such that the two cash series of flows are economically equivalent? The interest rate is 6% annual compounded annually.
Answer ___________________
Explanation / Answer
4)
Year Cash flows FVIF@10% Future value 0 $ - 0.3855 $ - 1 $ - 0.4241 2 $ - 0.4665 $ - 3 $ - 0.5132 $ - 4 $ - 0.5645 $ - 5 $ 700 0.6209 $ 434.63 6 $ 850 0.6830 $ 1,181.83 7 $ 1,000 0.7513 $ 751.30 8 $ 1,150 0.8264 $ 950.36 9 $ 1,300 0.9091 $ 1,181.83 10 $ 1,450 1.0000 $ 1,450.00 Future worth in 10th year $ 5,949.95