Cash flow stream Essay Example for Free

Cash flow stream Essay?1. What is the present judge of the following uneven bullion flow stream ?$50, $100, $75, and $50 at the end of Years 0 through 3? The sequester divert rate is 10%, heighten annually. PV=190.46 (SEE EXCEL load ATTACHED)2. We sometimes need to find bring out how long it will take a sum of money (or something else, such as earnings, population, or prices) to draw to some specified amount. For example, if a companys sales are growing at a rate of 20% per year, how long will it take sales to double? It would take about 3. 801784 eld before the sales double. (SEE EXCEL FILE ATTACHED)3. Will the future shelter be bigger or smaller if we compound an initial amount more often than annually for example, every 6 months, or semiannuallyholding the stated interest rate constant? Why? It will be larger because its basically like adding on interest on top of interest as the absolute frequency increases.4. What is the effective annual rate (EAR or EFF %) for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily? EAR = (1 + Nominal post/Number of Period) Number of Period -1 SEMI ANNUALLY= (1+.12/2)2-1=12.36%QUARTERLY= (1+.12/4)4-1=12.55%MONTHLY= (1+.12/12)12-1=12.68%DAILY= (1+.12/365)365-1=12.75%5. Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted) interest rate of 11.33463%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later? OCT initiative= 100*(1+.1133463/365) (365*.75) = $108.876. What would be the value of the bond described above if, just after it had been issued, the expected flash rate rose by 3 percentage points, causing investors to require a 13% product? Would we now have a discount or a premium bond? PV= $837.21 (SEE EXCEL FILE ATTACHED)It would be considered a discounted bond because the present value is less than its face value.7. What would happen to the bonds value if in flation fell and rd declined to 7%? Would we now have a premium or a discount bond? PV= $1210.71 (SEE EXCEL FILE ATTACHED)It would be considered a premium bond because the present value is more than the face value.8. What is the restoration to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a premium tell you about the relationship between rd and the bonds coupon rate? lay = 11% for a bond that sells for $887 and the RATE = 7% for a bond selling for $1134.209. What are the meat return, the current yield, and the capital gains yield for the discount bond in Question 8 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.) The return for the $887 bond is 11% and the yield is 90/887 which equals 10.15%. The capital gain would be 11% 10.15%= .85% The return for the $1134.20 bond is 7% and the yield is 90/1134.20 which eq uals 7.9%. The capital gain would be 7% 7.9%= -.9%