Apply cash flow analysis and time value of money concepts and relationships. Consider that you are nearing graduation and applying for a job with a financial services firm. As part of the computation process, you are asked to perform calculations and answer questions that cover this module's concepts. Procedure 1.
1) Draw a timeline for a $100 lump sum cash flow at the end of year 2,
2) An ordinary annuity of $100 per year for 3 years and
3) An uneven cash flow stream of -$50, $100, $275, and $50 at the end of years 0 through 3. 2.
Determine the following:
a. Future value of an initial $100 after 3 years considering annual interest of 10%.
b. Present value of $100 to be received in 3 years if the discount rate is 10%.
3. If a company's sales are growing at a rate of 20% per year, how long can it take for the sale to double?
4.In order for an investment to double in 3 years, what interest rate have to it earn?
5. Using a timeline, explain examples of an ordinary annuity and an annuity due.
6. Determine the future value of a 3-year ordinary annuity of $100 if the interest rate is 10%.
7. Evaluate the present value of a 3-year ordinary annuity of $100 if the discount rate is 10%.
8. Determine the present value of an uneven cash flow stream of $100 at the end of year 1, $300 at the end of year 2, $300 at the end of year 3, -$50 at the end of year 4 assuming a discount rate of 10%.
9. Determine the future value of $100 after 5 years under 12% annual compounding, quarterly compounding, semiannual compoundingm, and monthly compounding.
10. Determine the effective rate of interest for a nominal rate of 12% compounded semiannually, quarterly, and monthly.
11. Will the effective rate ever equal the nominal rate?