3184695161626 secondwayusevalueatyear2

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rrow $10,000 from your parents to buy a car. You agree to pay $207.58 per month for 60 months. What is the monthly interest rate? Sign convention matters!!! 60 N 10,000 PV ­207.58 PMT CPT I/Y = .75% Future Values for Annuities Future Values for Annuities Suppose you begin saving for your retirement by depositing $2000 per year in an IRA. If the interest rate is 7.5%, how much will you have in 40 years? 40 N 7.5 I/Y ­2000 PMT CPT FV = 454,513.04 Annuity Due Annuity Due You are saving for a new house and you put $10,000 per year in an account paying 8%. The first payment is made today. How much will you have at the end of 3 years? 2nd BGN 2nd Set (you should see BGN in the display) 3 N ­10,000 PMT 8 I/Y CPT FV = 35,061.12 2nd BGN 2nd Set (be sure to change it back to an ordinary annuity) Perpetuity – Example 6.7 Perpetuity – Example 6.7 Perpetuity formula: PV = C / r Current required return: 40 = 1 / r r = .025 or 2.5% per quarter Dividend for new preferred: 100 = C / .025 C = 2.50 per quarter Multiple Cash...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online