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FIN-504 MODULE 2 HW

FIN-504 MODULE 2 HW - 10000 1 $4,235 $1,300 $2,935 $7,065 2...

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Module One - Performance Analysis Gerald McGill Grand Canyon University FIN 504 - Finance Principles Time Value Methodology 12/22/2010 I) P4-18 A) 1) Annuity Interest RateNumber of Years CASE A= $36,216.41 $2,500 8% 10 CASE B $4,057.59 $500 12% 6 CASE C $223,248.00 $30,000 20% 5 CASE D $126,827 $11,500 9% 8 CASE E $2,140,721 $6,000 14% 30 2) Annuity Interest RateNumber of Years CASE A= $39,114 $2,500 8% 10 CASE B= $4,544.51 $500 12% 6 CASE C= $267,898 $30,000 20% 5 CASE D= $138,242 $11,500 9% 8 CASE E= $2,440,422 $6,000 14% 30 B) All else being equal, annuities due are preferrable due to the cash flow and occuring at the beginning of resulting in added interest as well. Ordinary annuities wait till the end of the first pay period before cash P4-47 A) Annual Payment to Repay Loan Loan Principal (Present Value) $10,000 Annual Rate of Interest 13% Number of Years 3 Annual Payment $4235,22 B) Loan Amortization Schedule Year Total To Interest To PrincipalYear-End Principal
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Unformatted text preview: 10000 1 $4,235 $1,300 $2,935 $7,065 2 $4,235 $918 $3,317 $3,748 3 $4,235 $487 $3,748 $1 C) Interest Expense Year 1 $1,300 2 $918.45 3 $487 II) Annuity Interest Rate Number of Years $720 8% 40 $186,520.69 The future value of $720 invested annually at 8% interest over 40 years is $186,520.69. My thoughts regarding this sum is that the return for this individual is worth the investment, all things co The investment equates to 15.54 years of the employee's current annual salary of $12,000. Whether or not the money will be sufficient depends largely on what expenses are incurred, and how lo The amount is enough to live on, however does not provide much financial support and limits the decisi f the first year of the annuity, flows occur and interest begins. onsidered. ong the individual lives. ions of the investor in the long-run....
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