Q9 Compute the present value of $10,000 to be received in 30 years, if the inter
ID: 2786550 • Letter: Q
Question
Q9
Compute the present value of $10,000 to be received in 30 years, if the interest of 8% per year is compounded quarterly.
Enter your number as a whole number
Q10
A department store offers the following credit terms on a new appliance "slashed" to a price of $420: only $40 down, and the balance in 24 monthly installments of $25. What monthly interest rate is the company implicitly charging its credit customers? Enter your answer as a whole number
Q11
Equivalent Annual Cost (EAC) (The Amortization Method, see Module page11.4) Your golf course has the opportunity to choose between two mowers.
Choice #1 costs $75,000 and is expected to last 5 years.
Choice #2 costs $100,000 and is expected to last 7 years. Typically, the golf course earns a return of 12% on this type of investment.
Determine the Equivalent Annual Cost (EAC) for choice #1. Round your answer to the nearest dollar
Q12
Equivalent Annual Cost (EAC) (The Amortization Method, see Module page 11.4) Your golf course has the opportunity to choose between two mowers.
Choice #1 costs $75,000 and is expected to last 5 years.
Choice #2 costs $100,000 and is expected to last 7 years. Typically, the golf course earns a return of 12% on this type of investment.
Determine the Equivalent Annual Cost (EAC) for choice #2. Round your answer to the nearest dollar
Explanation / Answer
Future Value = $10,000
Number of years = 30
Rate of return = 8%
Present Value = Future Value/(1+rate of return)^number of years
Present Value = $10,000/(1+8%)30 = $993.77~= $994
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Loan Installment = Present Value of Loan * periodic rate of interest / 1-(1+periodic rate of interest)^-no of periods
$25 = ($420-$40) * r /1-(1+r)-24
25/380 = r/1-(1+r)-24
r= 4% per period
Ans 4
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