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Problem 2.02 (i.e. Day 2, Problem 02). Consider the following cash flows: . You receive $50 at the beginning of the 7h year. You receive $100 at the end of the 10th year, and this payment is part of a finite annuity - with annu The cash flows that comprise the annu ity payments-that continues to the beginning of the 14th year. are growing at a constant rate of 6% per year. Part A: Draw a cash flow timeline where time is measured in years. Part B: Determine the size of the 2nd payment in the annuity stream. Part C: Determine the size of the last payment in the annuity stream. Part D: Compute the present value of ALL of the cash flows, using a discount rate of 6.00% per year. Express your answer precisely with 4 digits to the right of the decimal. rt D, but now use a discount rate of 6.01% per year. (Be very precise with your computations Part E: here) Redo Pa
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Answer #1

The cash flow timeline is drawn and then NPV is calculated by discounting the cash flows

12 13 10 100.00 106.00 112.36 119.10 Year 50.00 Cash flow 106.00 B) Size of 2nd payment C) Size of the last payment 119.10 10 12 13 4 Year 100.00 106.00 112.36 119.10 50.00 Cash flow PV@6% 0.00 0.00 0.00 0.00 0.00 35.25 0.00 0.00 0.00 55.84 55.84 55.84 55.84 Total 258.61 12 13 10 100.00 106.00 112.36 119.10 4 6 Year 50.00 Cash flow Pv @ 6.01% 0.00 0.00 0.00 0.00 0.00 35.23 0.00 0.00 0.00 55.79 55.78 55.78 55.77 Total 258.34

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