Date Assigned: Wednesday, February 27, 2019
Date Due: Friday, March 01, 2019 before class. No late homework will be accepted.
Homework 11
\begin{itemize}
\item Please notice that all work must be shown in a professional way with attention to detail
\item No credit will be given for incomplete or disorderly work
\item Please use a cover letter stating your name, course number, date due, and homework number
\item Unstapled homework will not be collected as this is part of the assignment
\item All work must be individual with emphasis on numerical accuracy
\item Any homework submitted after it is collected by the instructor is considered officially late (25\% late fee)
\item Please use Excel to solve all problems as shown in class
\end{itemize}
1. Problem One: Fiterman Insurance expects to receive $125,000 at the end of each year,
for the next 10 years. The nominal interest rate is 2.75\%. As shown in class, (a) use a
Discounted Cash Flow Model to compute the present value of these future cash flows,
(b) verify your answer by using the PV function in Excel.
2. Problem Two: Caterpillar Co. expects to receive $2,750,000 at the end of each year, for
the next 15 years. The nominal interest rate is 3.75\%. As shown in class, (a) use a
Discounted Cash Flow Model to compute the present value of these future cash flows,
(b) verify your answer by using the PV function in Excel.
