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quiz01 - is 5 per year(a Draw a cash ﬂow diagram and(b...

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QUIZ 1 Date : Feb 9, 2009 Name : ———————————————— 1. John borrowed \$20,000 to buy his Ford F-150 and repaid a total \$22,000 exactly 1 year later. Compute the interest and the interest rate. Interest = 22 , 000 - 20 , 000 = 2 , 000 , Interest rate = 2 , 000 20 , 000 × 100 = 10% . 2. Julie deposits \$2,000 in year 1 and decides to INCREASE her deposit by a constant amount of \$200 each year for 9 years thereafter. Suppose the interest rate
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Unformatted text preview: is 5% per year. (a) Draw a cash ﬂow diagram, and (b) calculate the present value of her deposit. Factor table values you MAY need: ( P/A, 5% , 10) = 7 . 7217 ( P/G, 5% , 10) = 31 . 6520 ( A/F, 5% , 10) = 0 . 07950 ( A/P, 5% , 10) = 0 . 12950 ( F/P, 5% , 10) = 1 . 6289 (a) Cash ﬂow : omitted (b) Present value P = 2 , 000 × ( P/A, 5% , 10) + 200 × ( P/G, 5% , 10) = 21 , 773 . 8 1...
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