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Week3QuizPart2 - F1515 QUIZ 1 PART 2 ANSWER:1(a pay $1120...

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F1515 QUIZ 1 PART 2 ANSWER :1 (a)  pay $1120 at end of the year r = (1 + i/n)^n I = 0.12 n = 1 r = (1 + (0.12/1))^1 - 1 = 12% By 1.73% EFF is higher in friends proposal (b) sticker price = $ 15000 down payment =$2000 due amount = $ 13000 nominal annual interest rate = 12% FV = PV( 1 + I /n) ^ n * y FV = 13000 (1 + 0.10/12)^ 12 * 5 FV = 21389.0161 Monthly payment FV/60 = $356.4836 © PV = $100 FV = 100 (1 + 0.06/2)^ 2 * 0.5 = $103 withdraw $ 100, PV = $ 3 After 19.5 yrs FV = 3 (1 +0.06/2)^ 2 * 19.5 = $9.5011 ending balance after 20 yrs is $9.5011 (d) PV = $3000 r = 10% n = 36 years FV = PV (1 + r)^ n + c[((1+r)^n - (1+r))/r] FV = 3000 (1 + 0.1) ^ 36 + 3000 [ ((1.1)^36 - 1.1)/0.1] FV = $990118.48 (e) FV =$10000 after 6 yrs
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FV = PV (1 + i/n)^ n*y 10000 = PV(1 + 0.08/1)^  1*6 PV = $ 7462.1297 Deposit today $ 7462.1297
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pay $10 for 11 months and $1010 at last month r = (1 + i/n)^n i=0.12 n=12 r = (1 + (0.12/12))^ 12 -1 = 13.73%
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Answer - 2 Operating income 250000 250000 Interest Received 10000 10000 Interest Paid Dividend received 20000 20000 - 20000 * 0.70 6000 Dividends paid 266000 Net taxable income = 171000 * 39/100
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