what is the Present Value of an asset that pays the following cash flows, if...
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what is the Present Value of an asset that pays the following cash flows, if you can invest them at a rate of return of 5%? Time Period Cash Flow 0 2 4 75 75 75 75 75 Note: this is an 'ordinary annuity', it is the default assumption for both Excel and your financial calculator. a) Identify the assumptions given in this problem Rate of Return # of years Annual Payment Future Value b) Solve this problem using the "PV" Function in Excel Present Value c) Solve this problem using the "NPV" function in Excel. Present Value d) Solve this problem by hand, as follows PV of cash flow in year 1 PV of cash flow in year 2 PV of cash flow in year 3 PV of cash flow in year 4 PV of cash flow in year 5 PV of Cash Flows (years 1:5) e) Solve this problem using your financial calculator: Present Value g) How much would you be willing to pay for this asset today? Explain your reasoning
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