Question

Find PV for following cash flows using a discount rate of 10% per period, all periods are of the same (but unspecified) duration.

                                    0_____1_____2_____3_____4

                                                $10      $10      $10      $110

                        a) use calculator, make sure that you know the procedure.

                                    p/yr=____, N=____, PMT=_____, i=____, FV=_____,                                                                      PV=_____

                        b) use spreadsheet, make sure that you know the procedure

                                    Show spreadsheet printout

                        c) use intuition:            PV=_____because ____________________

                                    Hint: Compare coupon rate and discount rate.

                        d) if we use a higher discount rate the PV will be                                                                                            higher/lower

                        e) do part 'a' using the 'cashflow mode' on the calculator.

                                    CF₀ = ____, CF₁ = ____, times = _____, CF₂ = ____,

                                    PV =   ____

4)         Use the cashflow diagram form problem 3 with the following data:

            Each period is 6 months long. Stated rate is 10%/year compounded semi-annually.

           

                        a)         use calculator, make sure that you know the procedure.

                                    p/yr=____, N=____, PMT=_____, i=____, FV=_____,                                                                      PV=_____

                        b)         use spreadsheet, make sure that you know the procedure

                                    Show spreadsheet printout

Answer 1

As per rules I am answering the first 4 subparts of the question

a) use calculator,

p/yr=1 ,

N=4

PMT=10

i=10%

FV=100

PV= 100

b)Spreadsheet: See image

c: Intuition

PV=100 because coupon rate is same as discount rate

d) if we use a higher discount rate the PV will be lower

e) Using the 'cashflow mode' on the calculator.

CF₀ = 10, CF₁ = 10, times =1, CF₂ = 10, Cf3 = 10, CF4= 110

                                    PV =  100

Sign in - Book1 - Excel 《Product Activation Failed) Share Tell me what you want to do Home InsertDrawPage Layout FormulasData Review View File 25, Wrap Text Currency 田EE " ▼ Calibri 11A A . Sort & Find & Editing % , 4,0ナ Conditional Format as Cell Insert Delete Format Filter-Select- ta Merge & Center-5 . Paste Formatting Table Styles Cells Number Styles Alignment Clipboard 丘 =PV(10%,4,10,100) C2 0 PV ($100.00) 10 12 13 14 15 16 17 Sheet1 + 100 Ready ENG 7:39 AM