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Finance Problems Set




Question;1-For each of the following, compute the present value: (Do not include the dollar signs ($). Roundyour answers to 2 decimal places. (e.g., 32.16))PRESENT VALUE$YEARS392415INTEREST RATE FUTURE VALUE4%$12,8001149,20015885,00019548,5002- An investment offers $3,500 per year for 11 years, with the first payment occurring one year from now. If the required return is 11 percent, the present value of the investment is $. If the payments occurred for 39 years, the present value of the investment would be $. If the payments occurred for 83 years, the present value of the investment would be $. If the payments last forever, the present value would be $3- You are planning to save for retirement over the next 20 years. To do this, you will invest $1,300 a month in a stock account and $800 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with an 8 percent return. Assuming a 20-year withdrawal period, you can withdraw $ each month from your account.4- You're prepared to make monthly payments of $110, beginning at the end of this month, into an account that pays 7 percent interest compounded monthly. When your account balance reaches $16,691 you will have made payments.5- Solve for the unknown interest rate in each of the following: (Do not include the percent signs (%).Round your answers to 2 decimal places. (e.g., 32.16)):PRESENT VALUE$26045037,20048,500YEARS4111729INTEREST RATE FUTURE VALUE%$3341,418186,003501,6836- Prepare an amortization schedule for a 5-year loan of $32,000. The interest rate is 10 percent peryear, and the loan calls for equal annual payments. (Do not include the dollar signs ($). Round youranswers to 2 decimal places, e.g. 32.16))Year12345BeginningBalance$32,000TotalPayment$InterestPayment$PrincipalPayment$EndingBalance$0.00Total interest paid:7- Maryland Company is trying to choose between the following projects:YearProject A: Cash FlowProject B: Cash Flow0$(80,000)(75,000)123Required rate of return:$$$30,00048,00016,00010%15,00016,00072,00012%Required: Which project should the company accept?1. Based on the net present value method of analysis. (calculate NPVs for both projects)2. Based upon the payback period. Show your calculation process3. Based on the profitability index method. Show your calculation process


Paper#47962 | Written in 18-Jul-2015

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