1) Let the uneven cash flow stream:
Year Cash Flow
a) Compute present (Year 0) value of cash flow stream if opportunity cost rate is= 10%?
b) Determine the value of cash flow stream at the ending of Year five if cash flows are invested in account which pays 10% annually?
c) What cash flow today (Year 0), instead of $2,000 cash flow, would be required to accrue $20,000 at the ending of Year five? (Suppose that cash flows for Years one through five remain same.)
2) You can buy a T-bill that is 95 days from maturity for= $9,965. The T-bill has the face value of $10,000. (LG 5-2)
a) Compute T-bill’s quoted yield.
b) Compute T-bill’s bond equivalent yield.
c) Compute T-bill’s EAR.