eoc_chapter_05

# eoc_chapter_05 - Chapter 5 Problems 1-56 Input boxes in tan...

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Chapter 5 Problems 1-56 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green

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Chapter 5 Question 1 Input area: Output area: Discount rate 10% Year Cash flow 1 \$700 2 300 3 1,200 4 1,600 \$2,878.70
Chapter 5 Question 2 Input area: Discount rate 5% # of years for X 10 # of years for Y 4 Payment for X \$4,000 Payment for Y 8,000 Output area: Value of X = \$30,886.94 Value of Y = \$28,367.60

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Chapter 5 Question 3 Input area: Output area: Discount rate 8% Year Cash flow 1 \$500 2 900 3 1,100 4 1,300 \$4,167.62
Chapter 5 Question 4 Input area: Annuity Required rate of return 8% # of years 15 Payment per year \$6,000 Output area: Present value = \$51,356.87

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Perpetuity Required rate of return 8% Payment per year \$6,000 Present value = \$75,000.00
Chapter 5 Question 5 Input area: Interest rate on annuity 10% # of years 12 Initial investment \$10,000 Output area: Annuity payment = \$1,431.88

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Chapter 5 Question 6 Input area: Interest rate on annuity 8.75% # of years 8 Annual revenues \$50,000 Database costs 250,000 Output area: Present value of investment = \$279,331.08 Yes, the system is affordable.
Chapter 5 Question 7 Input area: Interest rate on annuity 7.5% # of years 20 Annual deposit \$2,000 Output area: Future value of annuity = \$86,609.36

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Chapter 5 Question 8 Input area: Interest rate 3.8% # of years 7 Desired amount \$50,000 Output area: Annual deposit = \$6,378.68
Chapter 5 Question 9 Input area: Interest rate 11% # of years 7 Loan amount \$20,000 Output area: Loan payment = \$4,244.31

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Chapter 5 Question 10,11 Input area: Interest rate 9% Perpertuity payment \$10,000 Cost of policy \$120,000 Output area: Present value = \$111,111.11 Required interest rate = 8.33%
Chapter 5 Question 12 Input area: Output area: Stated rate (APR) # of times per year Effective rate 7% 4 7.19% 9% 12 9.38% 12% 365 12.75% 16% 2 16.64%

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Chapter 5 Question 13 Input area: Output area: Stated rate (APR) # of times per year Effective rate 8.81% 2 9% 17.52% 12 19% 7.70% 52 8% 13.98% 365 15%
Chapter 5 Question 14 Input area: Output area: Stated rate (APR) # of times per year Effective rate First National Bank 12.6% 12 13.35% First United Bank 12.8% 2 13.21%

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Chapter 5 Question 15 Input area: Output area: Stated rate (APR) # of times per year Effective rate 14.85% 365 16% The borrower is actually paying annualized interest of 16.00% per year, not the 14.85% reported on the loan contract.

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Chapter 5 Question 16 Input area: Interest rate 10% # of years 12 Deposit \$1,420 # of times compounded per year 2 Output area: Future value = \$4,579.64
Chapter 5 Question 17 Input area: Interest rate 2.60% # of years 5 Deposit \$5,000 # of times compounded per year 365 Output area: Future value = \$5,694.12

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## This note was uploaded on 05/01/2009 for the course FINC 106 taught by Professor Dr.nehale during the Spring '09 term at Baptist College of Health Sciences.

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eoc_chapter_05 - Chapter 5 Problems 1-56 Input boxes in tan...

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