TVMHW

# TVMHW - M-1 Simple and Compound Interest 1(a \$60,000 x 12%=...

This preview shows pages 1–2. Sign up to view the full content.

M-1 Simple and Compound Interest 1. (a) \$60,000 x 12%= \$7200 interest Total to be repiad in 12 mths \$67,200 (b) Interst payment \$7200 (c) \$67200 +\$3600=\$70800 2. \$67200 + \$4032 =\$71232 3. 2 is more because the interest for the second half year is compounded using the principal + first year interest, 1(c) uses principal only to determine interest. M-2 Reciprocal Relationships: Future and Present Value 1. FV= \$10050(1 + .10) 6 = \$17804 2. FV= \$650(1 + .03) 40 = \$2120 3. FV= \$5000(1+.16) 4 = \$9053 then \$9053(1+.08) 8 = \$16756 4. FV= \$1000(1+.04) 10 = \$1480 then \$1480+\$1000=\$2480(1+.03) 12 = \$3536 M-3 Reciprocal Relationships: Future and Present Value 1. PV= \$ 9412.50 2. PV= \$ 3377.82 3. PV= \$ 3150.75 4. PV= \$ 3953.55 M-4 Choosing Between Alternative methods \$10000(1+.10) 4 = \$14641 \$10000(1+.02) 16 = \$13727.86 Because of these calculations, Heather Company should take option one. M-6 Unknown Investment Periods 1. \$5051 at 10% per annum, compounded semiannually = 14 periods or 7 yrs 2. \$5002 at

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

TVMHW - M-1 Simple and Compound Interest 1(a \$60,000 x 12%=...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online