Mr. Art Deco will be paid $270,000 one year hence. This is a nominal flow, which he discounts at an 10% nominal discount rate: PV = $270,000 ÷ 1.10 = $245,455 The inflation rate is 5%. Calculate the PV of Mr. Deco's payment using the equivalent real cash flow and real discount rate. Note: Do not round intermediate calculations. Round your "Real cash flow" and "Present value" answers to the nearest whole dollar amount. Enter the "Real discount rate" as a percent rounded to 3 decimal places. Real cash flow Real discount rate Present value %
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- Investment X offers to pay you $7,500 per year for 9 years, whereas Investment Y offers to pay you $10, 200 per year for 5 years. a. If the discount rate is 6 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. If the discount rate is 22 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. a. Present value of Investment X at 6 percent Present value of Investment Y at 6 percent b. Present value of Investment X at 22 percent Present value of Investment Y at 22 percentInvestment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,400 per year for 5 years. If the discount rate is 7 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. If the discount rate is 23 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.Investment X offers to pay you $5,400 per year for 9 years, whereas Investment Y offers to pay you $7,500 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) If the discount rate is 21 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
- (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?Consider a loan of $10,000 and the following pattern of cash flows. a. What is the interest rate that makes the present worth equal to $0.00? b. Using the interest rate determined in part (a), and leaving the −$10,000 at year 0 in place, determine the equal annual incomes that are equivalent to the gradient series in years 1, 2, 3, and 4?Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,400 per year for 5 years. a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the discount rate is 20 percent, what is the present value of these cash flows?
- Investment X offers to pay you $4,800 per year for 9 years, whereas Investment Y offers to pay you $7,100 per year for 5 years. If the discount rate is 6 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Investment X Investment Y If the discount rate is 16 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Investment X Investment YWhat is the Discounted Present Value (DPV) if you expect to receive $8,000 in year 1, $9,000 in year 2 and $7,000 in year 3, when the interest rate is 8% in each year? Round your answer to one (1) decimal, do not write the dollar sign. Use the minus sign where appropriate.What is the equivalent uniform annual payment for the following cash flows if the interest rate is 10%? Populate the following table and compute the equivalent uniform annual payment. Show all work and provide an explanation. Do not use Excel. [Hint: This problem is a mix of annuity, gradient, and a single future cash flows.] ΕΟΥ Cash Flows Annuity Gradient Future 1 $2,000 2 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $14,000 IN 3 st 4 5 6 7. 8 9 10
- The appropriate discount rate for the following cash flows is 7.83 percent per year. Year Cash Flow 1 $ 2,570 2 0 3 4,010 4 2,260 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)Please answer this question: What is the value at the end of Year 3 of the following cash flow stream if interest is 4% compounded semiannually? (Hint: you can use the EAR and treat the cash flows as an ordinary annuity or use the periodic rate and compound the cash flows individually.) What is the PV? What would be wrong with your answer to parts I(1) and I(2) if you used the nominal rate, 4%, rather than the EAR or the periodic rate, I sow /2=4%/2=2%, to solve the problems?Assume the appropriate discount rate for the following cash flows is 10.3 percent. Year Cash Flow 1 $2,150 2,050 234 1,750 1,550 What is the present value of the cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value