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ACTP 5007 - Worksheet




Question;Worksheet 1 - Time Value of Money Scenario 1 Jonas Smith wants to accumulate a sum of money to pay for his MACCprogram. Rather than investing a single amount today, he decidesto invest $5,000 a year over the next three years in a savings accountaccount paying 8% interest compounded semi-annually. He decides tomake the first payment to the bank immediately. How much will Jonashave available in his account at the end of three years? Scenario 2 Assume that you borrow $1,000 from a friend and intend to repay theamount in five equal annual installments beginning one year from today.Your friend wishes to be reimbursed for the loan at 7% per year.What is the required annual payment that must be made to repay theloan in five years? Scenario 3 On June 30, 2010, Greyson Inc. issued $200 million of 10% bonds.The bonds pay interest semi-annually and mature on June 30, 2030.They were sold to yield 12% interest. What is the selling price of thebond? Instructions:Using the tables at the back of Chapter 6, answer the questions above.You MUST show all work in order to receive credit for the problems.


Paper#43759 | Written in 18-Jul-2015

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