Day 11-Ch 6-Part 1-10.10.11

# Day 11-Ch 6-Part 1-10.10.11 - Business Management 201 Day...

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Unformatted text preview: Business Management 201 Day 11 Chapter 6: Part 1—Bond Valuation October 10, 2011 Day 11 Agenda 1) POW Quiz #6: Citigroup Case & Duration Exercise— Completed Together in Class—Due Friday, October 14 at 11:59 PM 2) Next TA Review Sessions this Week: TA Open Lab Session—Tuesday 2:00 PM-3:00 PM in 251 TNRB TA POW Review Session—Tuesday 7:00 PM-8:00 PM in 3108 JKB 1) Midterm Exam: October 19-21—Study Guide Posted This Week 2) Personal Finance Topics 3) Negotiation Tips 4) POW #5: TVM—Content Blurbs: Question 9 & 10 5) Chapter 6: Part 1 Discussion POW #5: TVM POW #5: TVM Question 9—Annuity Question 9—Annuity What is the present value of a \$1,000 annuity for 10 years with the first payment occurring at the end of year 10 (that is, ten \$1,000 payments occurring at the end of year 10 through year 19) given an appropriate discount rate of 10 percent ? (round to the nearest dollar) Answer Choices \$2,866 \$6,145 \$2,369 \$2,606 POW #5: TVM—Content Blurbs What is the present value of a \$1,000 annuity for 10 years with the first payment occurring at the end of year 10 (that is, ten \$1,000 payments occurring at the end of year 10 through year 19) given an appropriate discount rate of 10 percent ? (round to the nearest dollar) POW #5: TVM—Content Blurbs 1 2 … 9 1 2 … 9 10 10 11 11 12 12 13 … 19 13 … 19 0 0 0 0 1000 1000 1000 1000 1000 0 0 0 0 1000 1000 1000 1000 1000 This problem will need to be completed in TWO steps using TVM or on your financial calculator using the CF j function. What is the present value of a \$1,000 annuity for 10 years with the first payment occurring at the end of year 10 (that is, ten \$1,000 payments occurring at the end of year 10 through year 19) given an appropriate discount rate of 10 percent ? (round to the nearest dollar) POW #5: TVM—Content Blurbs STEP 1: PV = ? FV = 0 PMT = 1000 I/Yr = 10 N = 10 PV: \$6144.567 STEP 2: PV = ? FV = 6144.567 PMT = 0 I/Yr = 10 N = 9 PV: \$2605.896 What is the present value of a \$1,000 annuity for 10 years with the first payment occurring at the end of year 10 (that is, ten \$1,000 payments occurring at the end of year 10 through year 19) given an appropriate discount rate of 10 percent...
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Day 11-Ch 6-Part 1-10.10.11 - Business Management 201 Day...

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