(1 point) You deposit $200 in an ideal Bank with rate r=0.04 compounded annually
ID: 2808574 • Letter: #
Question
(1 point) You deposit $200 in an ideal Bank with rate r=0.04 compounded annually Ater 1 year you withdraw SC. Atter 2 years you withdraw SC. Find the value of C such that the net present value of the cash flow stream, is zero. Let zo, 1, x2 represent the cash flow stream relative to your wallet. Then To200 Type C as C, leaving off the dollar sign. In computing the present value of the cash at different times, the discount factors are d(0,0)1 The present values of the cash at the different times, are PVo-200 The net present value of the cash flow is NPVIT0,i,x2-200+C 18861 The net future value (after 2 years) of the cash flow is NFVxo, T1,2200+C 1.04+C 1.04*2 The value of C such that the NPV of the cash flow is zero, is C-1 106.04 Suppose the two withdrawals are made in this amount. Select the true statement: d(0,1) 0.9615 , d(0,2)9246 After 2 years, the bank account is zeroExplanation / Answer
NFV = -200*(1+0.04)2 + 100 *1.04 + 100 is the correct answer.
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