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August 20, 2014

August 20, 2014

Posted by **perry** on Saturday, November 3, 2007 at 1:58am.

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. Washington-Pacific 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 Washington-Pacific plans to sell the forest at an expected price of $8 million. What is Washington-Pacific’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?

- Financial Management -
**Anonymous**, Thursday, April 8, 2010 at 5:36pm1. we34

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