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Assume that an investment of $1,000 produces a future cash flow of $1,000.
The discount factor for this future cash flow is 0.80. The
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- Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)Consider the following cash flow diagram. What is the value of X if the internal rate of return is 15%? Solve, a. $246 b. $255 c. $281 d. $290.Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
- Consider the cash flow below in Figure 1. If this cash flow is equivalent to cash flow given Figure (2) and if the interest is 10%, find A?9. The risk neutral probability is equal to 0.5 and the risk free rate is 4%. Furthermore the present value of cash flows is equal to V=90. If d = 1/u, then what is the value of Vin the downstate in the next period? Please round your answer to one decimal place and use a period to indicate the decimal place (e.g. 100.7 instead of 100,7). Enter answer hereASAP What factor notation will convert a gradient cash flow ending at t= 8, to a future value? If the effective interest rate is 10%, what is the numeric factor that will convert the gradient to a future value.
- For a given cash flow diagram, if the interest rate i=10% , and A=$800, the F value is closest to:9. The risk neutral probability is equal to 0.5 and the risk free rate is 4%. Furthermore the present value of cash flows is equal to V= 90. If d = 1/u, then what is the value of V in the downstate in the next period? Please round your answer to one decimal place and use a period to indicate the decimal place (e.g. 100.7 instead of 100,7).For the cash flow given below, if i= 20% , the future value, F is closest to:
- Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are $3,000, $2,000, $8,000, and $5,000 and the discount rate is ten percent. What is the future value at t = 4? do not use excelWhat is the NPV of the following cash flows if the required rate of return is 0.13? Year 0 1 2 3 4 CF -3,241 2,952 1,242 3,310 1,616 Enter the answer with 2 decimals (e.g. 1000.23).Consider two assets with the following cash flow streams:Asset A generates $4 at t=1, $3 at t=2, and $10at t=3. Asset B generates $2 at t=1, $X at t=2, and $10at t=3.Suppose X=6 and the interest rate r is constant. (a)For r=0.1, calculate the present value of the two assets. (b)Determine the set of all interest rates {r} such that asset A is more valuable than asset B. (c)Draw the present value of the assets as a function of the interest rate. (d)Suppose r=0.2.Find the value X such that the present value of asset B is 12. (e)Suppose the (one-period) interest rates are variable and given as follows: r01=0.1, r12=0.2, r23=0.3. Calculate the yield to maturity of asset A.
