Homework answers / question archive / 1) An investment is expected to generate 15 annual cash flows of $2220 per year, starting in exactly four years

1) An investment is expected to generate 15 annual cash flows of $2220 per year, starting in exactly four years

Finance

Share With

1) An investment is expected to generate 15 annual cash flows of $2220 per year, starting in exactly four years. There is an additional cash flow of $3015 expected in exactly 8 years. If the appropriate annual interest rate is 8%, compounded annually, what would you expect someone to pay for this investment today?

2) Who will have a greater accumulated sum in their superannuation fund at retirement and what will their balance be? William, who contributes $980 per half year for 26 years and earns (after fees) 6.50% pa compounding semi-annually, or Thomas, who contributes $480 per quarter for 26 years and earns (after fees) an average of 6.40% pa compounding quarterly."     

a) "William with $128,930"

b) "William with $50,960"

c) "Thomas with $126,339"

d) "Thomas with $49,920" 

e) They both end up with the same amount