Assume that you are nearing graduation and have applied for a job with a local bank. As part of the bank's evaluation process, y
1 answer:
Answer:
(1) See the attached picture for the time lines.
(2) The future value of $1000 = $1,276.28
Explanation:
(1) Draw time lines for (a) a $2000 lump sum cash flow at the end of year 4, (b) an ordinary annuity of $1000 per year for 5 years, and (c) an uneven cash flow stream of -$450, $1000, $650, $850 and $500 at the end of years 0 through 4.
Note: See the attached picture for the time lines for (a), (b), and (c).
(2) What is the future value of an initial $1000 after 5 years if it is invested in an account paying 5% annual interest.
This can be calculated using the future value formula as follows:
The future value of $1000 = $1000 * (100% + Annual interest rate)^Number of years = $1000 * (100% + 5%)^5 = $1000 * 105%^5 = $1,276.28
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<h2>Hope it helps!! </h2>