{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Fina A - 1 Question...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Question : You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one  year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you  have just after you make the 3rd deposit, 3 years from now? Student Answer: a.       $11,973.07 b.       $12,603.23 c.       $13,266.56 ( N        3 I/YR    5.2% PV      $0.00 PMT    $4,200 FV      $13,266.56 ) d.       $13,929.88 e.       $14,626.38 2. Question : Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the  beginning of each of the next 20 years? Student Answer: ( N        20 I/YR    8.25% PV      $275,000 FV      $0.00 PMT    $26,357.92 )
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
3. Question : What's the rate of return you would earn if you paid $950 for a perpetuity that pays $85 per year? Student Answer: ( Cost (PV)      $950 PMT    $85 I/YR    8.95% ) 4. Question : What is the present value of the following cash flow stream if the interest rate is 6.0% per year? 0 at Time  0; $1,000 at the end of Year 1; and $2,000 at the end of Years 2, 3, and 4. Student Answer: CFs:    $0      $ $2,000 PV of CFs:     $ $1,679 $1,584
Background image of page 2
PV =   $5,986. the Excel NPV PV =   $5,986. summing indiv PV =   $5,986. the calculator N )
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}