Question

10) What future worth is equivalent to the following cash flow profile if i = 10%? $500 $400 $300 $200 $100 0 1 2 3 4 5 6 a. $1,520.12 b. $1,947.45 c) S1,320.32 d) $2,120.2 11) A person borrowed a SR 10,000 at TVOM of 10%. He is required to repay the debt with 5 annual payments of SR 2,638. At EOY 3, he borrowed another SR 2,000 that he will repay with two payments of SR 1,152. Select the CF that represent the above situation. SR 2438 a. SR 10,000 SR 2.63% SR 2.678 SR 3.790 SR 3.790 b. SR2.638 SR 3.90 SR 3.790 2 34 SR 10.000 SR 2.000 SR 2.38 SR2.13 SR 3.790 SR 3.790 SR20 SR 10,000 SR 2.000 12) Considering the below cash flow diagram at 15% interest rate compounded annually, what time is needed for this investment? 1300 2 n 800 a. 4.28 b. 5.09 c. 3.47 d. 6.30

Answer 1

Question 10

Cash flow in year 2 = $500

Cash flow in year 3 = $400

Cash flow in year 4 = $300

cash flow in year 5 = $200

Cash flow in year 6 = $100

Interest rate = 10%

Calculate the future worth of the cash flow -

Future worth = $500(F/P, 10%, 4) + $400(F/P, 10%, 3) + $300(F/P, 10%, 2) + $200(F/P, 10%, 1) + $100

Future worth = [$500 * 1.4641] + [$400 * 1.3310] + [$300 * 1.2100] + [$200 * 1.1000] + $100

Future worth = $732.05 + $532.4 + $363 + $220 + $100

Future worth = $1,947.45

Thus,

The future worth of the given cash flow profile is equivalent to $1,947.45

Hence, the correct answer is the option (b)

Note -: As per the Chegg Answering Policy, when more than 1 question is posted then, in that case, only 1st posted question is answered with complete explanation.