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)
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
- Winter '14