Present and Future Value of an Uneven Cash Flow Stream
An investment will pay $200 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 5% annually, what is its present value? Round your answer to the nearest cent.
$
What is its future value? Round your answer to the nearest cent.
$
Reaching a Financial Goal
You need to accumulate $10,000. To do so, you plan to make deposits of $1,050 per year - with the first payment being made a year from today - into a bank account that pays 6.75% annual interest. Your last deposit will be less than $1,050 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number.
year(s)
How large will the last deposit be? Round your answer to the nearest cent.
$
PV and Effective Annual Rate
Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of $50 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $850 each. Your money is now invested in a bank that pays an 8% nominal (quoted) interest rate but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you? Do not round intermediate calculations. Round your answer to the nearest cent.
$