Problem Set 4

Problem Set 4 - full amount of the inheritance in a mutual...

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HPM 340: Foundations of Health Care Financial Management Fall 2009 Problem Set 4 (10 points) 1. Gapenski, Chapter 9 Problem 1 2. Gapenski, Chapter 9 Problem 2 3. Gapenski, Chapter 9 Problem 3 4. Gapenski, Chapter 9 Problem 4 5. Gapenski, Chapter 9 Problem 5 6. Gapenski, Chapter 9 Problem 6 7. Gapenski, Chapter 9 Problem 7 8. Gapenski, Chapter 9 Problem 9 9. Gapenski, Chapter 9 Problem 12 10. Your great Uncle Moneybaggs passes away and leaves you an inheritance. The terms of the will specify that you may choose between annual payments of $50,000 at the end of each of 5 years, or a lump sum payment of $200,000 now. Seeing this as an opportunity to start saving for the future, you plan to invest the
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Unformatted text preview: full amount of the inheritance in a mutual fund that earns 10% annually. a. On purely financial grounds, which option should you choose and why? b. What annual payment amount would make you indifferent between the $200,000 lump sum now option and the annual payments at the end of each of 5 years? 11. Gapenski, Chapter 11 Problem 1 12. Gapenski, Chapter 11 Problem 4 Problem Set 4 is due Tuesday, October 20th by 2 p.m. Problem set 4 should be completed by hand as practice for the mid-term exam. We will use EXCEL to calculate time value of money later. In this exercise, you will learn what EXCEL is doing. 1...
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