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ADM 2350 Winter 2011 Assign 1 Solns

ADM 2350 Winter 2011 Assign 1 Solns - Winter 2011 ADM 2350...

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1 Winter 2011 ADM 2350 SECTIONS M, N & P Prof. Wm. F. Rentz FINANCIAL MANAGEMENT Assignment #1 Solutions GENERAL INSTRUCTIONS: Your assignment must be sent electronically in doc, docx, or pdf format to the TUTOR for your section . Your tutor must RECEIVE your assignment by no later than noon on Thursday, January 27, 2011 . Late assignments will NOT be accepted. To ensure that your tutor receives the assignment on time, it is STRONGLY recommended that you electronically submit your assignment before midnight on the evening of Wednesday, January 26, 2011 at the latest. Unless there are system problems with doc-depot, the professors’ solution set will be posted on doc-depot by no later than 6 PM of the due date. This assignment counts 5% of your course grade. You are encouraged to work on this assignment in teams of up to 5 students from the same section of this course . However, you may turn in an individual assignment if you prefer. Each assignment must be typed and contain the student name(s) and student number(s) on each page. A scanned statement of integrity must be electronically attached to each assignment (See pages 10-11 of the course syllabus). Each individual whose name appears on the assignment must sign the statement of integrity. Live Links for Tutors’ E-mail Addresses: Section M Yue Wan [email protected] Section N Sushil Dahiya [email protected] Section P Yuan Liu [email protected] Section Q Malcolm MacQuarrie [email protected] 1. (20 marks) Claudette is a fourth-year business student who wants to go on a graduation celebration/vacation in Costa Rica, but she has no money to pay for the trip. After the vacation, Claudette will start her career. Her job will require moving to a new town and buying professional clothes. She asked her parents to lend her $8,000, which she figures she will be able to pay back in four years. Her parents agree to lend her the money, but they will charge 4 percent interest per year. a. (5 marks) What amount will Claudette need to pay back at the end of four years? Scientific Calculator Approach FV n = PV 0 1 + k ( ) n FV 3 = $8,000 × 1.04 4 = $9,358.87
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Winter 2011 Assignment #1 Solutions ADM 2350 2 Scientific Calculator Marking Scheme 1 mark for correct expression 1 mark for entering correct PV 1 mark for entering correct interest rate 1 mark for entering correct n 1 mark for correctly calculating FV Excel or Financial Calculator Approach TVM Calculator TVM INPUTS COMPUTE SOLUTION Periods, N 4 Rate, i 4.00% PV $8,000.00 PMT FV 1 -$9,358.87 Type Excel or Financial Calculator Marking Scheme 1 mark EACH for correct inputs for N, i, PV, and PMT (total 4 marks) 1 mark for correct FV NB. The PMT cell can be left blank in the Excel template as this is interpreted as being $0.00. 0 need not be entered in the PMT register of the BAII+ so long as one remembers to use the keystrokes [2 nd ][CLR TVM] before entering data. One also needs to set P/Y = C/Y = 1 instead of the BAII+ factory default value of 12.
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