FINANCIAL MANAGEMENT HOMEWORK TVS FALL 2018 Assume annual compound interest unle
ID: 2814788 • Letter: F
Question
FINANCIAL MANAGEMENT HOMEWORK TVS FALL 2018 Assume annual compound interest unless stated otherwise. 1. If the interest rate is 4%, what are the proceeds of a SS,000 investment ater 10 years a) assuming simple interest b) assuming compound interest 2. What if interest in #1 is compounded semi-annually? What if monthly? 3. How much do you need to deposit into a bank in order to receive proceeds of $200,000 in 5 years if the interest rate is 2.5% What if interest is compounded quarterly? 4, what is the present value of $200,000 to be received in 5 years if the rate of discount is 2.5%? s, what is the price today of a $200,000 cash flow in S years if the discount rate is 25% 6. What tisthe price today of $200,000 to be received in 6 years if the rate of discount is 25%? Compare to #5. 7, what is the price today of $200,000 to be received in 5 years if the rate of discount is 3%? Compare to #5. 9 a) What must be the interest rate in order for an investment of $1,000 to produce proceeds of $2,000 in 20 years? b) If a cash flow of $2,000 in 20 years has a price today of $1,000, what must be the discount rate (i.e., the "implied" rate)? 10. An asset promises to pay $50,000 in five years and $100,000 in ten years. What is its price if the 5 year rate of discount is 10% and the 10-year rate of discount is 5%? 11. An asset promises to pay $1,000 in each of the next two years.Explanation / Answer
1.Simple Interest=5000*4%*10=2000
Total Receivable = 5000+2000+7000
Compound Interest = 5000*1.04*10-5000=2401
Total Receivable = 5000+2401=7401
7. Todays Amount = 200000/(1.03)power5
=172522
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