Midterm 1

# Midterm 1 - In the following cash flow diagram what is the...

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In the following cash flow diagram, what is the equivalent of P 0 in terms of G? Use a gradient in your formulation. Q2--- Find the value of Z on the left hand cash flow diagram that establishes equivalence with the right hand cash flow diagram. The nominal interest rate is 12% compounded quarterly . Q3--- You plan to provide a retirement fund for yourself by making end-of-year deposits of \$1000 for each of the next 35 years into a fund which earns 5% interest annually. After 35 years, you will withdraw \$5082 per year until the fund is exhausted. (a) Draw a cash flow diagram from your perspective. (5 pts) (b) How long (to the nearest year) will it take to exhaust the fund that you have built up for 35 years? (10 pts) (c) Instead of withdrawing \$5082 per year, if you would like to receive quarterly payments for the same duration as in (b), how much would you get paid each quarter? (10 pts)

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Q4--- A TV network is to decide how many 30-second commercials it should air during a one-hour long show.
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## This note was uploaded on 03/16/2012 for the course FENS 101 taught by Professor Selçukerdem during the Fall '12 term at Sabancı University.

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Midterm 1 - In the following cash flow diagram what is the...

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