3184695161626 secondwayusevalueatyear2

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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...
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