Assignment: MANAGERIAL FINANCE DECISION MAKING
Prepare a 5-7 PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11% annually, what is its present value? Its future value?
5-10 PRESENT AND FUTURE VALUES FOR DIFFERENT INTEREST RATES find the following values. Compounding/discounting occurs annually.
a. An initial $200 compounded for 10 years at 4%
b. An initial $200 compounded for 10 years at 8%
c. The present value of $200 due in 10 years at 4%
d. The present value of $1,870 due in 10 years at 8% and at 4%
e. Define present value and illustrate it using a time line with data from part d. How are present values affected by interest rates?
5-15 PRESENT VALUE OF AN ANNUITY Find the present values of these ordinary annuities. Discounting occurs once a year.
a. $600 per year for 12 years at 8%
b. $300 per year for 6 years at 4%
c. $500 per year for 6 years at 0%
5-21 EVALUATING LUMP SUMS AND ANNUITIES Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $62 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.6 million.
a. If she thinks she can earn 7% annually, which should she choose?
b. If she expects to earn 8% annually, which is the best choice?
c. If she expects to earn 9% annually, which option would you recommend?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.