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Financial Management Problems




Question;Problems Answers Appear in Appendix BEASY PROBLEMS 1?8(4?1) Future Value of a Single PaymentIf you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?(4?2) Present Value of a Single PaymentWhat is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?(4?6)Future Value: OrdinaryAnnuity versus Annuity DueWhat is the future value of a 7%, 5-year ordinary annuity that pays $300 each year?If this were an annuity due, what would its future value be?(4?9)Present and FutureValues of Single CashFlows for Different PeriodsFind the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can ?override? the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.)a. An initial $500 compounded for 1 year at 6%b. An initial $500 compounded for 2 years at 6%c. The present value of $500 due in 1 year at a discount rate of 6%d. The present value of $500 due in 2 years at a discount rate of 6%(4?12)Future Value of an AnnuityFind the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. (Notes: See the Hint to Problem 4-9. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.)a. $400 per year for 10 years at 10%b. $200 per year for 5 years at 5%c. $400 per year for 5 years at 0%d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year, that is, they are annuities due.166 Part 2: Fixed Income Securities(4?13)Present Value of an AnnuityFind the present value of the following ordinary annuities (see the Notes to Problem 4-12).a. $400 per year for 10 years at 10%b. $200 per year for 5 years at 5%c. $400 per year for 5 years at 0%d. Now rework parts


Paper#48869 | Written in 18-Jul-2015

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