{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Spring 2011 Midterm 1 Solutions

Spring 2011 Midterm 1 Solutions - Solutions to Midterm I...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Solutions to Midterm I, FIN 350, Spring 2011 Form Answer Form Answer A B A B 1 2 A 14 15 B 2 7 B 15 16 D 3 4 D 16 17 A 4 1 C 17 14 A 5 3 B 18 18 C 6 8 D 19 19 E 7 5 C 20 20 A 8 6 C 21 21 A 9 9 A 22 25 E 10 13 C 23 22 B 11 12 B 24 23 E 12 10 A 25 24 D 13 11 E Solutions: 1. (Comp.) Time value concepts Answer: a MEDIUM 2. (5-18) Amortization Answer: b MEDIUM 3. (5-4) Finding I Answer: d EASY Solution: N 5 PV $747.25 PMT $0 FV $1,000.00 I/YR 6.00% 4. (5-15) FV, semiannual compounding Answer: c MEDIUM Years 5 Periods/Yr 2 Nom. I/YR 6.0% N = Periods 10 PMT $0 I = I/Period 3.0% PV $1,500 Could be found using a calculator, an equation, or Excel. FV = $2,016 Note that we must first convert to periods and rate per period. 5. (5-15) Non-annual compounding Answer: b MEDIUM/HARD Interest rate 4.0% Periods/year 4 Years on Quarters Ending Quarterly rate 1.0% Deposit on Deposit Amount 1st deposit $2,500 3 12 $2,817.06 2nd deposit $5,000 2 8 $5,414.28 3rd deposit $7,500 1 4 $7,804.53 6. APR vs. Effective Annual Rate Answer: d MEDIUM
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
EAR = (1+15%/12) 12 -1 = 16.075% or 16.08% 7. PV of an uneven CF stream Answer: c Diff: E Time Line: 0 1 2 3 4 5 6 7 8 9 Years | | | | | | | | | | PV = ? 2,000 2,000 2,000 2,000 2,000 3,000 3,000 3,000 4,000 14% Financial calculator solution: Using cash flows Inputs: CF 0 = 0; CF 1 = 2000; N j = 5; CF 2 = 3000; N j = 3; CF 3 = 4000; I = 14. Output:
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 5

Spring 2011 Midterm 1 Solutions - Solutions to Midterm I...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online