Question

All appli cable Appli catio CO Probl ems are avail able with Con ec. 1. Use the present value tables in and to compute the NPV of each of the following cash inflows: a $18.300 received at the end of 15 years. The discount rate is 5 percent. b. $5,800 received at the end of 4 years and $11,600 received at the end of 8 years. The discount rate is 7 percent. c. $1.300 received annually at the end of each of the next 7 years. The discount rate is 6 percent. d. $40,000 received annually at the end of each of the next 3 years and $65,000 received at the end of the fourth year. The discount rate is 3 percent. 2. Use the present value tables in and to compute the NPV of each of the following cash inflows: a $89.000 received at the end of 6 years. The discount rate is 4 percent. b. $3,400 received annually at the end of each of the next 15 years. The discount rate is 9 percent. e. A 10-year annuity of $5,000 per annum. The first $5,000 payment is due immediately. The discount rate is 6 percent. d. $20,000 received annually at the end of years 1 through 5 followed by $13,000 received annually at the end of years 6 through 10. The discount rate is 15 percent. 3. to compute the 3. Use the present value table in and NPV of each of the following cash outflows: a. $22,000 paid at the end of 4 years. The discount rate is 5 percent. b. $2,000 paid at the end of 3 years and $5,000 paid at the end of 5 years. The discount rate is 8 percent.

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1 COMPUTATION OF NPV AMOUNT Period/Time Total (NPV) DISCOUNT RATE Annuity Factor Discounted Value PRESENT VALUE FACTOR 0.481 0.763 0.582 5% 8,802.30 18,300.00 End of 15th year 5,800.00 End of 4th year 11,600.00 End of 8th year 1,300.00 For 7 years 40,000.00 For 3 years 65,000.00 End of 4th year 8,802.30 4,425.40 6,751.20 6,392.52 113,144.40 57,720.00 11,176.60 6,392.52 6% 4.91732 2.82861 0.888 170,864.40 2 COMPUTATION OF NPV AMOUNT ($) Period/Time Total (NPV) DISCOUNT RATE PRESENT VALUE FACTOR Annuity Factor Discounted Value 0.79 89,000.00 End of 6th year 3,400.00 For 15 years 5,000.00 For 10 years (Payment immidiately) 20,000.00 Year 1-5 13,000.00 Year 6-10 4% 9% 6% 15% 15% 70,310.00 27,406.34 39,008.46 67,043.10 21,665.98 70,310.00 27,406.34 39,008.46 8.060688 7.8016922 3.352155 1.66661362 88,709.08 3 COMPUTATION OF NPV AMOUNT ($) Period/Time DISCOUNT RATE Total (NPV) Annuity Factor Discounted Value PRESENT VALUE FACTOR 0.8227 0.7938 0.6806 5% 18,099.40 22,000.00 End of year 4 2,000.00 End of year 3 5,000.00 End of year 5 8% 18,099.40 1,587.60 3,403.00 4,990.60