Chapter3 - Name: Nguyen Thi Lan Thanh Class: Friday Morning...

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Name: Nguyen Thi Lan Thanh Class: Friday Morning Student ID: 1236311 CHAPTER3 Questions 5.4/ Would you rather have a savings account that pay 5% interest compounded semiannually or one that pay 5% interest compounded daily? Explain I would rather have a savings account that pays 5% interest compounded daily. Because I would earn more “interest on interest”. 5.5/ To find the present value of an uneven series of cash flows, you must find the PVs of the individual cash flows and then sum them. Annuity procedures can never be of use, even when some of the cash flows constitute an annuity because the entire series is not an annuity. True or false? Explain. False. One can find the present value of an embedded annuity and add this PV to the PVs of the other individual cash flows to determine to the present value of the cash flow stream. Problems 5.3/ FINDING THE REQIURED INTEREST RATE Your parents will retire in 18 years. They current have %250,000, and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds? With a financial calculator enter the following: N=18, PV= -250000, FV=1000000 and PMT=0.
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This note was uploaded on 11/23/2011 for the course MANAGEMENT 101 taught by Professor Nguyen during the Spring '11 term at Troy.

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Chapter3 - Name: Nguyen Thi Lan Thanh Class: Friday Morning...

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