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    calculate the following discounted cash flow problems

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    Please calculate the following discounted cash flow problems

    a. The future value of $1,250 received today and invested at 6 percent for 10 years

    b. The future value of an annuity of $275 invested each of the next 5 years at 4 percent.

    c. The present value of the following cash stream: year 1: 200, year 2: 200, year 3 200, discounted at 12 percent.

    d. The present value of a 500 dollar cash payment expected to be received 16 years from now, discounted at 8 percent.

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    Solution Preview

    a. The future value of $1,250 received today and invested at 6 percent for 10 years

    FV = 1250
    Rate I/Y = 6%
    N = 10
    By a financial calculator, or use the formula we can compute:
    PV = FV / (1+r)^n = 1250/(1+6%)^10 = $698

    b. The future value ...

    Solution Summary

    Computations done by hand using formula are examined.

    $2.19

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