Calculate the discount factors (present value factors) at 8% for years 1, 2, 3, and 4 (show all work, including equations). What if the discount factor for year 3 above is equal to .900. Would that provide arbitrage opportunities? Explain fully.
Present Value Factor = 1/(1+r)t
r = interest rate
t = time period
PV factor for year 1 = 1/1.08 = 0.9259
PV factor for year 2 = 1/(1.08)2 = 0.8573
PV factor for year 3 = 1/(1.08)3 = 0.7938
PV factor for year 4 = 1/(1.08)4 = 0.7349
If discount factor for year 3 is equal to 0.900
0.900 = 1/(1+r)3
r = 3.57%
So, this provides arbitrage opportunity as then one can borrow at 3.57% and invest at 8% interest rate.
Calculate the discount factors (present value factors) at 8% for years 1, 2, 3, and 4...
Calculate the discount factors (present value factors) at 8% for years 1, 2, 3, and 4 (show all work, including equations). Given your answer, aside for the math reasoning, why would economists claim that discount count factors must decline? Must that be true? Explain fully. What if the df for year 3 above is equal to .900. Would that provide arbitrage opportunities? Explain fully.
Calculate the discount factors (present value factors) at 8% for years 1, 2, 3, and 4 (show all work, including equations). Given your answer, aside for the math, why are the discount count factors declining? Must that be true? Explain fully.
Calculate the present value of an $1100 discount bond with 4 years to maturity if the yield to maturity is 8%. The present value is $___ (Round your response to two decimal places.)
QUESTION 4 Present Value of $1 Discount Present Value of an Annuity of S1 Rate Discount Rate Periods 1 8 % 10% 8% 10% 5 0.6806 0.6209 3.9927 3.7908 7 0.5835 0.5132 5.2064 4.8684 0.5002 0.4241 6.2469 5.7590 The present value of an obligation of $8,000 payable in 7 years at 8% is: O $6,412 O $3,520 $7,360 $4,668
2. For each of the following, compute the Present Value. Show your work. Present Value Years Interest Rate Future Value 13 10% 15,500 4 8% 51,555 29 24% 886,072 40 35% 550,165 A & T 3. You have just been notified that you have won the $2 million lottery! The prize will be awarded on your 100h birthday which is 80 years from now. If the current discount rate is 5%, what is the present value of your windfall? Show...
please show work.
3. Calculate the Present Value of a $175,000 payment to be received in 4 years based on a discount rate of 3.75%.
a. Find the present values of the following cash flow streams at a 4% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent. 0 1 2 3 4 5 Stream A Stream B Stream A: $ $0 $0 $150 $300 $350 $350 $350 $350 $350 $350 $300 $150 Stream B: $ b. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar. Stream A: $ Stream...
1. What is the discount rate assuming the present value of $840 at the end of 1-year is $765? 2. What is the Future value of $3,500 deposited for 12 years at 5% compounded annually? 3. If $2,800 is discounted back 4 years at an interest rate of 8% compounded semi-annually, what would be the present value? 4. Determine the future value of $6,000 after 5 years if the appropriate interest rate is 8%, compounded monthly.
1. Calculate the present value of $50,000 to be received in 15 years assuming an annual interest rate of 6%. 2. Calculate the present value of $1,000,000 to be received in 20 years assuming an annual interest rate of 5%, compounded monthly. 3. Calculate the future value of $1,000 invested for 5 years assuming an annual interest rate of 20%. 4. Calculate the future value of $12,000 invested for 18 years assuming an annual interest rate of 12%, compounded monthly....
A) What is the present value of this cash flow at 8% discount
rate?
B) What is the present value of this cash flow at 14% discount
rate?
C) What is the present value of this cash flow at 27% discount
rate?
Different cash flow. Given the following cash inflow, what is the present value of this cash flow at 8%, 14%, and 27% discount rates? Year 1 Year 2: Years 3 through 7: Year 8: $1,000 $5,000 $0 $25,000