FINTEST2-6

# FINTEST2-6 - C1 Exam Number 3(12 Points Given the problem...

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Unformatted text preview: C1. Exam Number 3. (12 Points) Given the problem on the left, write the required formula on the right. If factors are required, use as few as possible. Use numerical interest rates when appropriate. . You borrow \$90,000 with a 30-year mortgage at 6% nominal interest rate. A = 90000*(A/P' .005, 360) Payments are monthly. Write the formula for the amount of the monthly payment. . You borrow \$90.00!) with a 30-year The amount owed is the present mortgage at 5% nominal intemst rate worth of the remaining payments. Aftermaking payments for 30 months, you Owed = A*(P/A, .005, 330). sell the house for \$95.0“). Write the Remaining = 95000 - Owed formula for the amount of money remaining of the selling price after you pay off your loan to the bank. . 10' years ago you boughta corporatebond Set the net present worth to zero. for \$9,000. The bond has a face value of -9000 + 800( P/A, i r 10) + \$10.000- Every yearthecompeny has paid +10000(P/F,i,10) = 0 interest to you in the amount of 8% of the face value. The bond has just matured and paid you the full face value. Write the formula that you must solve to determine the IRR for the investment in the bond. . A good friend is in need of money. He The future value of the amount in will receive \$20,000 from a trust fund in real terms is 20000/(1 ,04)2 two years. Although that money amount is Pay = [zoom/(1,0011%, .05, 2) fixed, the general inﬂation rate is 4%. He will sign over the money from the trust fund to you if you will give him some money today. Write the formula for the most that you can give him if your real MARR is 6% per year. ...
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