1. What is the accumulated sum of each of the following streams of? payments?
a. ?$490 a year for 88 years compounded annually at 10 percent.
b. ?$104 a year for 66 years compounded annually at 77 percent.
c. $33 a year for 13 years compounded annually at 12 percent.
d. ?$26 a year for 66 years compounded annually at 55 percent.
2. Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable at one rate of return, it will be acceptable at all rates of return. To explain why his thinking is incorrect, you are creating an example to illustrate your point. The cash flows you are using are as follows: time zero is -$83,000, years 1 through 5 are $21,300 each, and years 6 through 8 are $16,700 each. The net present value at a discount rate of 8 percent is _____ as compared to _____ at 20 percent.
a. -$31,068; -$4,825
b. $31,121; -$4,931
c. $31,298; -$5,064
d. $31,335; -$5,163
e. $31,464; $5,258