Use Integrated Case 5-42 First National Bank A and B (1) (2) only
TIME VALUE OF MONEY ANALYSIS You have applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions:
Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2; (2) an ordinary annuity of $100 per year for 3 years; and (3) an uneven cash flow stream of −$50, $100, $75, and $50 at the end of Years 0 through 3.
What’s the future value of $100 after 3 years if it earns 4%, annual compounding?
What’s the present value of $100 to be received in 3 years if the interest rate is 4%, annual compounding?