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Unformatted text preview: as a negative number in order to calculate an unknown number of
periods. That approach is used here.) Using the inputs shown at the left, you will
find the number of periods to be 8.15, which is consistent with the value found
using Table A–4.
Spreadsheet Use The number of years to pay off the loan also can be calculated
as shown on the following Excel spreadsheet. 168 PART 2 Important Financial Concepts Review Questions
4–15 How can you determine the size of the equal annual end-of-period deposits
necessary to accumulate a certain future sum at the end of a specified future
period at a given annual interest rate?
4–16 Describe the procedure used to amortize a loan into a series of equal periodic payments.
4–17 Which present value interest factors would be used to find (a) the growth
rate associated with a series of cash flows and (b) the interest rate associated with an equal-payment loan?
4–18 How can you determine the unknown number of periods when you know
the present and future values—single amount or annuity—and the applicable rate of interest? S U M M A RY
FOCUS ON VALUE
Time value of money is an important tool that financial managers and other market participants u...
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