Financial Management
posted by perry on .
Hi, would anyone be willing to help with this. Thanks :)
2. Find the following values:
a) An intial $500 compounded for 10 years at 6 percent
b) An intial $500 compounded for 10 years at 12 percent
c) The present value of $500 due in 10 years at a 6 % discount rate.
d) The present value of $1, 552.90 due in 10 years at a 12 % discount rate and at a 6% rate. Give a verbal definition of the term present value, and illustrate it using a time line with data from this problem. As a part of your answer, explain why present values are dependent upon interest rates.
3. To the closest year, how long will it take $200 to double if it is deposited and earns the following rates?
a) 7%
b) 10%
c) 18%
d) 100%
4. Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1; that is, they are ordinary annuities.
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, c assuming that payments are made at the beginning of each year; that is, they are annuities due.
5. Find the present value of the following ordinary annuities:
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.
14. WashingtonPacific invests $4 million to clear a tract of land and to set out some young pine trees. The trees will mature in 10 years, at which time WashingtonPacific plans to sell the forest at an expected price of $8 million. What is WashingtonPacificâ€™s expected rate of return?
18. You need to accumulate $10,000. To do so, you plan to make deposits of $1,250 per year, with the first payment being made a year from today, in a bank accountant that pays 12% annual interest. Your last deposit will be less than $1,250 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal, and how large will the last deposit be?

14. The rate of return depends partly upon what they netted from the sale of lumber. A doubling of land value in 10 years amounts to a average annual 7.2% capital gain, but presumably there was additional income from logging activity.
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